Who Will Run Out of Oil First? These Asian Countries Might Not Survive More Than 40 Days

Although there were reports on Monday that some oil tankers are passing through the Strait of Hormuz, the trend over the past two weeks clearly shows that the estimated oil flow through the strait continues to decline rapidly.

Bank of France estimates that the current oil flow through the Strait of Hormuz is about 500,000 barrels per day, which means a reduction of 19.5 million barrels per day compared to the previous average flow. Even considering rerouted transportation via regional pipelines, approximately 17 million barrels of oil are still unable to be transported normally each day.

Meanwhile, the scale of oil production shutdowns in Middle Eastern oil-producing countries is also rapidly expanding, now approaching 7 million barrels per day, and may surpass 10 million barrels per day within a few days. In terms of refined oil products, due to export disruptions and limited pipeline rerouting options, nearly 2 million barrels per day of refining capacity in the Gulf region has been shut down due to supply bottlenecks. Coupled with infrastructure attacks, this has led to tighter global supply and demand balance for refined oil products, triggering soaring prices.

The key issue now is clearly emerging: which countries will be the first to hit the “oil wall”?

The French bank’s commodities research team believes that, thanks to the continued depletion of refined oil inventories, Europe remains relatively unaffected for now.

The region’s commercial and strategic tanks hold nearly 70 million barrels of jet fuel, enough to offset a supply gap of up to 300,000 barrels per day in the Gulf region for several months, easing initial shocks. However, given the Gulf region’s role as a major supplier to Europe, Africa, and Asia, the supply pressure on middle distillates (especially diesel and jet fuel) is rapidly increasing.

The naphtha market, crucial to Northeast Asian petrochemical industries, is also tightening, and reduced shipments of liquefied petroleum gas from the UAE and Qatar have pushed the propane market higher. As a result, the entire supply system is being forced to rebalance supply and demand by raising refined product prices.

The current critical question is how long major importing countries can maintain their fuel systems before more severe supply shortages occur. Although countries are drawing on strategic reserves, commercial inventories, and floating storage facilities, the level of assurance varies significantly among them.

Are Southeast Asian countries the most at risk?

The French bank points out that Asian economies may face even more severe problems because the region’s imports through the Strait of Hormuz exceed 13 million barrels per day—about 50% of total regional imports—with China, India, South Korea, and Japan being the four largest buyers.

In terms of proportion, Japan and South Korea are most affected among the top four oil buyers in the region, as 81% and 62% of their oil respectively comes from the Strait of Hormuz.

Among these four buyers, China’s energy security is relatively better protected. According to estimates by the French bank, even if the Strait of Hormuz is blocked and supply is interrupted, China’s large oil reserves could buffer the risk of supply disruption for nearly 300 days.

In terms of reserve days, India and South Korea are the most vulnerable among the four, with their oil stocks only able to buffer the risk of disruption from the Strait of Hormuz for 74 and 73 days, respectively.

Of course, further examining the list of buyers affected by the Strait of Hormuz oil flow—including several Southeast Asian countries such as the Philippines, Myanmar, and Vietnam—shows that their buffer capacity is even more limited, supporting only 20-40 days.

For other Asian regions outside the four major buyers, about 70% of their oil imports come from the Strait of Hormuz, and their reserve days are far weaker than those of the four main buyers.

In terms of stock volume, the entire Southeast Asian region’s reserves are highly uneven. Some areas hold substantial crude oil reserves but almost no refined product inventories. A common point is that nearly all countries have very tight reserve days.

From the perspective of import barrels, Singapore is most affected by the Strait of Hormuz, relying on about 680,000 barrels of oil daily from the region. While Brunei’s oil reserves are sufficient in days, its refined product inventories are very limited.

Currently, many Asian governments are exploring or implementing emergency measures to stabilize domestic fuel markets.

Some measures are mainly preventive, such as restricting exports or utilizing strategic reserves. Others are more aggressive—indicating tighter physical supplies—including demand suppression policies, targeted subsidies, or rationing in some cases.

Due to Iran’s war causing fuel supply disruptions and price increases, Vietnam’s Ministry of Trade issued a statement on March 10 urging local businesses to encourage employees to work from home to save fuel. The Vietnamese government also decided to cancel fuel import tariffs until the end of April.

Thailand’s government announced on the 4th of this month that diesel and gasoline prices are frozen immediately. To maintain low domestic diesel prices, Thailand is using fuel funds for substantial subsidies.

The Philippine president, Marcos, recently said that authorities are preparing measures to mitigate the impact of rising fuel prices, including reducing fuel excise taxes, providing fuel subsidies, and instructing some government departments to adopt a four-day workweek.

The escalating energy crisis has also once again hindered many Southeast Asian countries’ ambitions to build supply chain hubs. In recent years, these countries have actively attracted multinational investments to develop regional manufacturing centers. But after encountering this “oil wall,” addressing strategic reserve gaps and improving energy and power infrastructure may become more critical than investment promotion in the coming years.

(Source: Cailian Press)