Experts warn that although strategic petroleum reserves in Asia appear sufficient to cushion potential supply disruptions triggered by escalating geopolitical tensions in the Middle East, significant disparities between countries and the region’s heavy refining dependence on Middle Eastern crude could place substantial pressure on energy security.
The risks posed by the escalating war between the US-Israel and Iran for regional energy production, oil shipments and maritime transportation are already affecting markets.
Some major producers in the region have been forced to cut output due to security and logistical challenges, heightening concerns over global oil supply and pushing prices above $100 per barrel. Asian countries, which are major importers of Middle Eastern crude, are expected to be among the most affected.
- China holds largest strategic petroleum reserves
Homayoun Falakshahi, head of crude oil analysis at Kpler, told Anadolu that the Asia-Pacific region currently holds an estimated 1.78 billion barrels of oil in onshore storage tanks.
"Of this, 722 million barrels are in strategic storage, although part of the others can also be considered as strategic: for example, storage at China's state-owned refineries could be considered strategic reserves," Falakshahi said.
China holds the largest strategic petroleum reserves with around 400 million barrels. Japan’s reserves stand at 265 million barrels, while South Korea holds about 57 million barrels. India’s strategic reserves, by contrast, are only about 30 million barrels, according to Falakshahi.
Falakshahi noted that oil demand in the Asia-Pacific region currently stands at around 25–26 million barrels per day, of which 21 million barrels are met through imports, including 10.6 million barrels per day from the Persian Gulf.
He also pointed to reports that Japan is considering releasing oil from its strategic reserves.
"Similar steps could soon be seen in other countries. Asian nations may release oil from their reserves, but there are large divergences: China has 170 days of import cover from the Persian Gulf via its SPR, while Japan has 132 days, SK around 33 days and India only 11 days," he said.
- 'More than half of world's refining capacity will be directly impacted'
Dan Evans, vice president for Global Head of Fuels and Refining at S&P Global Energy, said the tensions between the US-Israel and Iran could directly affect the refining sector, particularly in Asian countries that import large volumes of crude from the Middle East.
Because it is unclear when the crisis will end, governments are preparing for worst-case scenarios, Evans said.
"That could mean serving the domestic market first. For countries that export refined product, that could mean reducing refining runs to match domestic demand and banning exports. China has suspended new product export approvals and Thailand has also halted exports," he said.
For importing countries, the worrying scenario would be a snowballing of these measures, Evans warned.
"More than half the world's refining capacity will be directly impacted: Around 6 million barrels per day of refining capacity inside the Strait of Hormuz, faces risk of coming under attack and challenges exporting product via the Strait of Hormuz. An additional 6 million barrels per day of capacity outside the Strait of Hormuz but in/close to the conflict zone faces risk of coming under attack," he said.
"An additional 42 million barrels per day located outside the conflict zone but typically processing Middle Eastern crude as part of their feedstock diet face risk of not being able to access the crude they typically process," Evans added.
He noted that the remaining global refining capacity could be indirectly affected due to tightening market conditions.
"No country/refiner will be immune to this crisis. Countries that will be most resilient are likely to be those with access to domestic crude and/or signfnciant strategic or commercial stocks (OECD + China). Those most vulnerable could be countries that are reliant on imports and have no strategic stocks/little commercial stock (some African countries for example)," he said.
"A prologned crisis is likely to prompt a rethink on the strategic importance of refining. Countries/regions where capacity has shutdown recently and where import-dependence has increased are vulnerable in this crisis. That could influence refinery investment and closure decisions going forward," he added.
By Ebru Sengul Cevrioglu
Anadolu Agency
energy@aa.com.tr