Global Oil Reserves In The Spotlight As West Asia Conflict Intensifies

By Zarul Effendi Razali

KUALA LUMPUR, March 12 (Bernama) -- The escalating crisis in West Asia has pushed global oil reserves and emergency stockpiles back into the spotlight, as energy analysts warn that prolonged instability in the region could disrupt supply routes and intensify volatility in international energy markets.

The conflict between the United States (US), Israel, and Iran have raised concerns over the security of the Strait of Hormuz, one of the world’s most critical oil transit chokepoints.

According to the International Energy Agency (IEA), roughly 20 per cent of the world’s oil supply passes through the strait, making any disruption a significant risk to global energy markets.

Reuters reported that major industrialised economies are considering coordinated releases from emergency reserves.

Analysts warn that the conflict could trigger one of the largest supply shocks in recent years.

In Asia, large import-dependent economies China, India, Japan, and South Korea are particularly vulnerable to rising oil prices and supply uncertainties.

China, the world’s largest crude importer, has expanded its strategic petroleum reserves significantly in recent years, while Japan and South Korea maintain substantial emergency stockpiles as members of the IEA.

India, the world’s third-largest oil consumer, imports a large portion of its crude from West Asia, making it especially sensitive to disruptions in the region.

For Southeast Asian economies such as Malaysia, Singapore, Thailand, and Indonesia, the crisis could translate into higher fuel costs, increased shipping risks, and greater pressure on energy security.

While emergency reserves may provide short-term relief, experts caution that prolonged instability in West Asia could continue to reshape global oil flows and reinforce the strategic importance of energy diversification and stockpiling for both producing and importing nations.

Anadolu Ajansi reported that oil prices climbed above US$101 a barrel Thursday, despite the IEA announcing a unanimous agreement among its 32 member countries to release 400 million barrels of oil from their emergency reserves. The coordinated release is the largest in history, the head of the energy watchdog said Wednesday.

Futures for Brent crude surged nearly 20 per cent as the development failed to ease market concerns over prolonged disruptions to shipping through the Strait of Hormuz. Brent traded near US$101 a barrel as of 0200 GMT, more than 38 per cent higher than levels recorded before the outbreak of the war in Iran.

Brent reached its highest level of about US$147 per barrel in July 2008 during the 2008 oil price spike, driven by strong global demand, tight supply, geopolitical tensions in major oil-producing regions, and heavy speculative investment in energy markets.

Data by the US Energy Information Administration and energy datasets showed that Venezuela holds the world’s largest proven oil reserves to date, estimated at more than 300 billion barrels, followed by Saudi Arabia (around 267 billion) and Iran (more than 200 billion).

Iran itself is among the countries most directly affected by the current conflict. Its oil industry faces risks from military escalation, sanctions, and potential infrastructure damage.

Iraq, which holds approximately 145 billion barrels of proven reserves, is also vulnerable due to its geographic proximity to Iran and reliance on export terminals located along the Persian Gulf. Analysts warn that any escalation in regional tensions could disrupt maritime shipping routes used to transport Iraqi crude.

Saudi Arabia as the world’s largest crude exporter also plays a central role in maintaining global supply stability. The kingdom has historically acted as a swing producer capable of increasing output during supply disruptions.

Other Gulf producers such as the United Arab Emirates (UAE) and Kuwait, both members of the Organisation of the Petroleum Exporting Countries, rely heavily on export routes through the Strait of Hormuz. According to the IEA, millions of barrels of crude oil from these countries pass through the waterway daily.

Qatar, which is primarily known as a major exporter of liquefied natural gas, also depends on the same maritime route for energy shipments.

The US, the world’s largest oil producer, has considered releasing large volumes from its emergency reserves to stabilise supply, while other major oil producers such as Russia and Canada could also see increased demand if West Asian supply is disrupted.

-- BERNAMA