Asia looks to store oil, gas closer to home after Strait of Hormuz crisis

Asia suffered some of the worst economic fallout when the United States and Israel went to war with Iran six months ago.

The region is heavily reliant on Gulf oil and gas that normally flows through the Strait of Hormuz, where shipping has been reduced to a trickle by Iranian attacks and a US naval blockade.

Asian countries quickly imposed fuel conservation measures as oil and gas prices surged, ranging from price caps to alternate driving days and work-from-home mandates for civil servants.

In the months since, Asia has begun seeking a more permanent solution to the biggest energy disruption in history – keeping the oil and gas it needs much closer to home.

“The crisis is producing two very different kinds of investment: infrastructure that bypasses geopolitical risk, and infrastructure that eliminates exposure to imported fuel altogether,” said Parul Bakshi, a visiting research fellow at the Oxford Institute for Energy Studies.

One of the most ambitious proposals to emerge from the crisis has come from Japan.

Though highly dependent on Middle Eastern energy, Japan has weathered the crisis better than many other economies because it holds one of the world’s largest strategic oil reserves.

Tokyo wants its neighbours in Southeast Asia to follow its lead.