Asia Hit Hard by Hormuz Strait Blockade, Launches Emergency Measures [U.S.-Iran War]

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Asian countries have simultaneously implemented emergency measures in response to Iran's blockade of the Strait of Hormuz. These countries rely heavily on the Middle East for a significant portion of their crude oil imports. The largest importers, China and India, have turned to Russian oil to make up for the shortfall. Japan, which began expanding its oil storage facilities last year, is planning to diversify its energy supply by reducing its imports of Middle Eastern crude oil and increasing its investments in U.S. energy.

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According to Bloomberg on March 5 (local time), Asia is reported to be the region most affected by the crude oil supply disruptions caused by the blockade of the Strait of Hormuz. Bloomberg's analysis of the final destinations of oil tankers passing through the Strait of Hormuz found that 34% were headed to China, 12% to India, 10% to Japan, 10% to Korea, and another 18% to other Asian regions-meaning a total of 84% was destined for Asian countries. In contrast, only 7% went to Europe and 3% to the United States.

The level of oil reserves in these countries varies widely. According to data from the International Energy Agency (IEA) and energy analytics firm Kpler, China holds the largest reserves in Asia, storing more than 1.5 billion to 2 billion barrels. This is estimated to cover about 130 days of consumption. In contrast, India, with relatively low reserves, holds only about 37 million to 39 million barrels-enough for just 25 days.

In terms of the number of days of reserves, Japan appears to be the most prepared. According to the Nihon Keizai Shimbun (Nikkei), the Japanese government has stated that its reserve covers 254 days. The volume is estimated to be between 175 million and 200 million barrels. In November last year, Japan focused on expanding its reserves, including increasing the Saudi Aramco reserve in Okinawa from 3.8 million barrels to 8.2 million barrels.

Since the outbreak of the war in Ukraine in 2022, China and India have increased imports of Russian oil, and now, amid the Iran conflict, they are moving to substitute shortfalls with even more Russian crude. According to the South China Morning Post (SCMP) in Hong Kong, China has imported about 13% of its total crude consumption from Iran, but as imports from Iran become difficult, it is entering negotiations with Russian companies to increase supply.

India is also working to secure more Russian crude. According to the Moscow Times, on March 5, two Russian oil tankers en route to East Asia changed their destination to India. This move is believed to be at the request of the Indian government and domestic refiners. Since the beginning of this month, Indian refiners are reported to have begun negotiations with the Indian government regarding Russian oil imports.

However, the United States is pressuring these countries to increase imports of American crude, which is expected to present challenges. The Wall Street Journal (WSJ), citing sources, reported that "U.S. Treasury Secretary Scott Bessent has added increasing American oil purchases by China to the agenda ahead of next month's U.S.-China summit."

Last month, India announced that it would cut tariffs on U.S. imports from 50% to 18% in exchange for a complete halt to Russian crude imports. The U.S. government has proposed that India purchase oil that has entered the United States via Venezuela.

Associated Press Yonhap News Agency

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Japan plans to reduce its dependence on Middle Eastern oil, which currently stands at 95%, to below 90%, and to increase imports of U.S. crude as an alternative. According to the Yomiuri Shimbun, at the end of last year, Japan Petroleum Exploration Co., Ltd. (JAPEX) announced it would acquire VRIH, a company holding oil and gas fields in Colorado and Wyoming, for USD 1.3 billion (about KRW 1.92 trillion). The plan is to directly secure the supply of U.S. oil and gas for use in Japan's thermal power generation.

The large-scale infrastructure investment project in the United States, announced by Japan last month, totals USD 36 billion (about KRW 53 trillion), with a gas-fired power plant in Ohio accounting for USD 33 billion of the total investment.

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