Antonio Griffin
The months-long closure of the Strait of Hormuz has forced a reckoning for oil-importing nations across the Asia Pacific and beyond. With more than 10 million barrels per day stranded in the Persian Gulf, governments from New Delhi to Canberra are now racing to expand strategic and commercial reserve capacity — and the scale of demand that creates could reshape global oil markets for years.
At a Glance
- The Strait of Hormuz closure stranded over 10 million bpd of crude, triggering an energy crisis across Asia
- The U.S. Strategic Petroleum Reserve has fallen to its lowest level since 1983; Cushing stockpiles sit at just 20 million barrels
- India, Australia, Singapore, and Pakistan are all pursuing major reserve expansion plans
- Filling new and depleted storage sites globally could require roughly 1 billion barrels, spread over several years
- Saudi Aramco is also weighing expanded global storage, particularly in Asia
How Complacency Created the Crisis
Before this conflict, the Strait of Hormuz closing to tanker traffic was treated as a theoretical worst case — something analysts and policymakers acknowledged in risk registers but rarely planned around seriously. The straits had never actually been shut before. That assumption proved costly.
Nearly four months of stalled traffic and ongoing uncertainty about the reopening timeline have drained reserves at an alarming pace. The U.S. SPR, tapped heavily as part of the largest coordinated stock release in history — 400 million barrels released by IEA member states in March — is now at a level not seen since 1983. At Cushing, Oklahoma, the delivery hub for WTI crude, inventories have dropped to roughly 20 million barrels, a threshold that traders consider operationally stressed.
The Storage Expansion Push
India is moving first and most urgently. The country is the world's third-largest crude importer, yet its underground Strategic Petroleum Reserve holds just 5.33 million metric tons of crude — equivalent to 39 million barrels, or about eight days of national consumption. That single-digit buffer exposed a deep vulnerability during the Hormuz crisis. The government has now reportedly directed state-owned Oil and Natural Gas Corp (ONGC) to design and fill a new strategic reserve site, with an estimated price tag of $1.6 billion.
Pakistan is taking a different approach, inviting Persian Gulf producers to establish crude reserve buffers at a planned Energy City near Gwadar Port. A Pakistani official told local media in May that the country would hold first-use rights over any reserves stored there in the event of an emergency.
Singapore, one of the world's leading oil trading hubs, announced in April that it would examine additional underground spaces to expand fuel reserves. Australia, meanwhile, is committing AUS$10 billion (roughly US$7 billion) to build out its fuel stockpile through a mandatory minimum stockholding obligation and a dedicated Boosting Australia's Diesel Storage Program. The urgency is hard to overstate: during the current crisis, Australia — an IEA member that has chronically failed to maintain the 90-day reserve standard — turned to China for jet fuel supply while one of its two remaining refineries sat idle after a fire.
Producers Are Also Stockpiling
This isn't purely an importer story. Saudi Aramco chairman Yasir Al-Rumayyan said last week that the company is seriously considering expanding its global oil storage network, which already includes facilities across Asia. "We are thinking seriously of having larger storage facilities all over the world," Al-Rumayyan said — a signal that even the world's top crude exporter wants to position barrels closer to buyers before the next chokepoint crisis hits.
What 1 Billion Barrels of Demand Means for Prices
Analysts at Reuters calculate that storage expansion plans announced across India, Singapore, Australia, and Pakistan alone could require around 500 million barrels to fill. Layer on top of that the 400 million barrels IEA members need to replenish, plus additional crude to reverse ongoing drawdowns during peak summer demand — and the total refill requirement over the coming years could approach 1 billion barrels.
That's a meaningful floor under prices. Expanded capacity requires crude to fill it, and that sustained demand, spread across several years, should support a rebound in global oil consumption from next year onward — assuming Hormuz traffic can normalize in the second half of 2025.
Frequently Asked Questions
How low has the U.S. Strategic Petroleum Reserve fallen?
The coordinated IEA release of 400 million barrels in March — the largest in history — pushed U.S. SPR stocks to their lowest level since 1983. Those reserves will need to be rebuilt over time, adding to global crude demand.
Why does India have so little strategic reserve capacity?
India's underground strategic petroleum reserve system was built with a total capacity of just 39 million barrels, covering roughly eight days of consumption. Unlike China, which has accumulated more than 1 billion barrels of crude stocks, India did not aggressively build out storage infrastructure in prior decades.
What is Australia doing to address its reserve shortfall?
Australia plans to spend AUS$10 billion (about US$7 billion) on a combination of mandatory minimum stockholding rules and new physical storage through its Boosting Australia's Diesel Storage Program, aiming to bring its reserves closer to the IEA's 90-day requirement.
Could rising reserve capacity actually push oil prices higher?
Yes, in the near to medium term. Filling new and depleted storage sites requires purchasing crude, and Reuters data suggests the global refill need could total around 1 billion barrels spread over several years — a sustained demand signal that analysts expect to put a floor under prices.
The New Calculus for Energy Security
The Hormuz crisis has done what years of policy discussion could not: forced real spending on strategic reserves across four continents. Whether governments follow through at the scale they've announced will depend on budget discipline and political will — but the direction is clear. The era of assuming the world's critical chokepoints will always stay open is over.
