Gulf Oil Producers Boost Asian Stockpiles Amid Regional Conflict
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Gulf Oil Producers Boost Asian Stockpiles Amid Regional Conflict
- Saudi Arabia and the United Arab Emirates are seeking to expand their crude oil stockpiles in Japan and South Korea by up to tenfold, as regional instability threatens crucial supply routes.
- This move comes as the ongoing Iran war, which began in late February 2026, has significantly disrupted global oil supplies, particularly through the Strait of Hormuz.
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In response to the prolonged conflict in the Middle East and its impact on energy security, Gulf oil producers, specifically Saudi Arabia and the United Arab Emirates (UAE), are actively pursuing a strategy to increase their overseas oil reserves in East Asian nations like Japan and South Korea. The war, which commenced in late February 2026, has led to the effective closure of the Strait of Hormuz, a vital chokepoint through which over 20% of the world’s oil trade typically passes. This disruption has caused significant volatility in energy markets, with Brent crude oil prices surging to around $80-$82 per barrel by early March 2026.
Both Saudi Arabia and the UAE have reportedly requested Japan to substantially increase their existing crude reserves, which are currently around 8 million barrels each, by as much as ten times. Similar discussions are also underway with South Korea. Japan has historically served as a key overseas storage hub for Middle Eastern producers, with the UAE storing crude there since 2009 and Saudi Aramco since 2010. These agreements often grant Japan preferential access to the stored crude in emergencies.
The urgency for expanding these stockpiles is underscored by the ongoing threats to shipping in the Strait of Hormuz and the Red Sea, including attacks by Iran-linked Houthi rebels, which have pushed Brent crude prices to around $108 per barrel by mid-September 2026. South Korea, which imported about 70% of its crude oil from the Middle East in 2025, aims to reduce this reliance to below 50% by 2035 and plans to expand its crude oil stockpiles by approximately 20 million barrels by 2030. In July 2026, South Korea and the UAE’s national oil company, ADNOC, signed an agreement to secure crude oil supply chains and establish a joint emergency response framework, including the supply of up to 24 million barrels of UAE crude to Korea.