The Strait of Hormuz crisis has highlighted the need for Asia to make energy security the foundation of its policies, maintain adequate reserves of crude oil, refined products, and liquefied petroleum gas, and support greater collaboration with global partners. Atul Arya, chief energy strategist at S&P Global Energy, delivered this warning at the Asia Pacific Petroleum and Energy Conference (APPEC) in Singapore, where he declared that energy security must now dictate policy decisions across the continent.
China and Japan have demonstrated greater resilience than most nations during this disruption, thanks to their extensive stockpiles of crude oil, refined fuels, and liquefied petroleum gas. Despite their heavy dependence on Middle Eastern oil, both countries have softened the impact through strategic reserves. In contrast, India, Thailand, and Pakistan—also significant importers—maintain far smaller buffers, leaving them more susceptible to instability.
Arya insisted that these countries must expand their reserve capacities and diversify their supply sources. While the immediate costs may rise, the long-term risks of instability far outweigh the financial burden. He noted that collaboration in Asia’s energy transition cannot remain aspirational but must be specific, operationalized, cross-sectoral, and realistic, involving governments, corporations, financiers, and technology providers. According to him, the current crisis is less about climate objectives than about ensuring stable, long-term energy availability.
Balancing emissions with energy resilience
On the demand side, electrification and energy efficiency measures could reduce reliance on imported fuels. Nations with domestic coal reserves, such as India and China, may increase its utilization, while others should accelerate the development of renewable and nuclear energy projects to lessen import dependence. Arya highlighted that true resilience requires a balanced energy mix, incorporating renewables, gas, coal, and emerging technologies like hydrogen and carbon capture.
Policymakers now face a critical balance: reducing emissions without compromising affordability, reliability, or industrial competitiveness. Arya argued that Asia’s energy transformation must be practical, not theoretical. He emphasized that the crisis presents an opportunity for Asia to double down on technologies that can better utilize domestic resources for long-term supply security.
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As the oil market shifts from crisis management to a contested recovery phase, instability persists. Premasish Das, executive director for oil analytics at S&P Global Energy CERA, noted that Asia bears the heaviest burden of disruptions, importing 80% of the crude it consumes. Middle Eastern production is projected to remain, on average, about 4 million barrels per day below prewar production levels through 2027, forcing refiners to seek alternative feedstock sources.
Asia’s refining crisis deepens supply shortages
China, with its excess refining capacity and cautious demand strategy, has absorbed some of the shock. However, Vitol CEO Russell Hardy cautioned that Asia’s shortages are more acute than in Europe or the United States, where high prices are the primary concern. Refiners across the region are struggling to secure sufficient crude supplies, with China contributing significantly to the deficit.
The crisis has compelled Asia to acknowledge an unavoidable reality: energy security is no longer a secondary concern. Without stronger reserves, more diverse supply chains, and coordinated efforts, the region’s economic stability will continue to face serious threats.
Industry leaders are now pushing for accelerated infrastructure investments to address these vulnerabilities. While Europe and North America have adjusted to high prices, Asia’s economic growth remains tightly linked to affordable energy access. The region’s refiners, particularly in India and Southeast Asia, are operating at near-full capacity, leaving little room for additional supply shocks.
For now, the focus remains on immediate solutions. The crisis has exposed how deeply interconnected Asia’s energy systems are, and how a single disruption can ripple across economies. Without decisive action, the region’s ability to sustain growth will be undermined by persistent vulnerabilities in its energy supply chains.