Asia races to expand oil and gas storage after Strait of Hormuz disruption

Asian economies are moving to expand oil and gas storage closer to home after severe disruption to energy flows through the Strait of Hormuz. The shift comes after months of reduced shipping through the waterway, which normally carries much of the Gulf fuel supply on which the region depends. Governments across the region are now looking for ways to reduce exposure to future conflict in the Middle East.

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The disruption followed the war between the United States and Israel and Iran six months ago, which triggered sharp price rises and emergency conservation measures across Asia. Those measures included price caps, alternate driving days and work-from-home orders for civil servants in some countries. The article says shipping through the Strait of Hormuz has been reduced to a trickle by Iranian attacks and a US naval blockade, underlining how quickly the crisis affected regional energy security.

Japan has emerged as one of the most active players in the response. In April, Prime Minister Sanae Takaichi announced a $10bn POWERR Asia initiative aimed at helping Southeast Asian economies procure oil and petroleum products and, over the longer term, build strategic stockpiles. Japan itself has weathered the crisis better than many other economies because it holds one of the world's largest strategic oil reserves.

Tokyo is now encouraging neighbours in Southeast Asia to follow its lead and strengthen their own reserves. The push matters because many Asian economies remain heavily reliant on imported Gulf oil and gas, leaving them exposed to shocks in the Strait of Hormuz. The article describes the current effort as a search for a more permanent solution to what it calls the biggest energy disruption in history.

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It also points to a broader policy split now emerging in the region: some investment is aimed at bypassing geopolitical risk, while other projects are intended to reduce dependence on imported fuel altogether. The scale of vulnerability is illustrated by reserve levels cited in the report. At the outbreak of the Iran war in late February, Vietnam had only five to seven days of oil in national reserves, although commercial inventories and other sources extended supplies for up to another 65 days.

Thailand had about 61 days of reserves across public and private sectors in early March, while the Philippines was estimated to have 50 to 60 days of supplies in private commercial inventories. All of those figures were below the International Energy Agency's 90-day benchmark. The crisis has already revived policy debates in Bangkok and Manila over whether to establish more comprehensive state-held strategic oil reserves.

A parliamentary panel in the Philippines approved a bill last month to move that discussion forward, according to the report. What remains unclear is how quickly governments can turn these plans into physical storage capacity and whether the new initiatives will be enough to shield the region from another major supply shock. The next developments to watch are funding commitments, reserve legislation and whether more countries join Japan's initiative.

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