Saudi Arabia, UAE back Japan plan to strengthen Asia oil reserves

Dubai: Saudi Arabia and the UAE will support a Japan-led initiative to strengthen oil supplies and strategic stockpiles in Southeast Asia, as disruptions linked to the US-Iran war expose vulnerabilities in Asia’s energy supply chains.

Officials from the two Gulf producers joined a special session of the Asia Zero Emission Community (AZEC) in Manila on Thursday, where ministers from 11 partner countries, including Japan, Indonesia and Australia, discussed cooperation on oil procurement and emergency reserves.

“Both countries from the Middle East expressed their willingness to cooperate on strengthening oil stockpiling capacity in Asia,” Japan’s State Minister of Economy, Trade and Industry Takagi Kei told reporters in Manila, according to Bloomberg.

The participating countries adopted a ministerial work programme aimed at expanding oil storage capacity and improving their ability to respond to supply disruptions.

The initiative comes after the conflict in the Middle East, which began in late February, triggered severe disruptions to global energy markets, with the closure of the Strait of Hormuz driving up costs and raising concerns about the availability of crude and refined fuels across Asia.

Southeast Asian economies are particularly exposed to supply disruptions because of their reliance on imported crude. Before the conflict, more than half of the region’s crude oil imports came from Persian Gulf producers, while Japan sourced about 90% of its oil from the region, much of it transported through the Strait of Hormuz, Bloomberg reported.

The disruption forced some refiners to reduce processing and prompted governments to ration fuel supplies, highlighting the risks associated with dependence on a narrow set of supply routes.

Japan announced $10 billion in financial support for Southeast Asian countries in April to help them manage higher crude prices and supply disruptions. The package includes assistance for oil purchases, storage infrastructure and emergency reserves, as Tokyo seeks to improve the region’s ability to withstand future supply shocks.

“The recent disruptions in global energy markets, particularly at the critical choke point of the Strait of Hormuz, have reinforced the importance of strengthening our collective preparedness against energy supply shocks,” Philippine Energy Secretary Sharon Garin said at a joint briefing with Takagi.

The proposed framework could also create opportunities for Saudi Arabia and the UAE to strengthen their commercial relationships with Asian oil buyers.

Bilateral supply arrangements could allow importing countries to negotiate directly with Middle Eastern producers while positioning more crude closer to key Asian markets. Greater storage capacity could help importing nations manage temporary disruptions, although rebuilding reserves remains expensive.

Oil prices above $100 a barrel have increased the cost of replenishing stockpiles, while reserves across much of the Association of Southeast Asian Nations remain relatively limited.

For Gulf exporters, closer cooperation on oil storage and procurement could help reinforce their position in Asia, a major destination for Middle Eastern crude.

The initiative also reflects a broader reassessment of energy security following the Hormuz disruption, with governments seeking to strengthen emergency supplies and reduce their exposure to future shocks.