Who Will Run Out of Oil First? These Asian Countries May Not Last More Than 40 Days……

Caixin March 17 News (Editor: Xiao Xiang) Despite reports on Monday that some oil tankers are passing through the Strait of Hormuz, the trend over the past two weeks shows that the estimated oil flow through the strait continues to decline rapidly.

Societe Generale estimates that current oil flow through the Strait of Hormuz is about 500,000 barrels per day, which means a reduction of approximately 19.5 million barrels per day compared to the average flow in the past. Even considering rerouted transportation via regional pipelines, about 17 million barrels of oil per day cannot be transported normally.

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 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 a tightening of global refined oil supply and demand balance, triggering soaring prices.

Given this background, a key issue is becoming clear: which countries will be the first to hit the “oil wall”?

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

The region holds nearly 70 million barrels of jet fuel in commercial and strategic reserves, enough to offset up to 300,000 barrels per day of Gulf supply shortages for several months, easing initial impacts. 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, critical 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 oil prices.

The key question now is how long major importers can keep their fuel systems running before more severe supply shortages occur. While countries are deploying strategic reserves, commercial inventories, and crude oil in floating storage facilities, there are significant differences in their levels of security.

Are Southeast Asian countries the most vulnerable?

Societe Generale points out that Asian economies face potentially more severe problems because the region’s oil imports passing 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 by the Strait of Hormuz, with 81% and 62% of their oil historically coming from this route.

Among these four buyers, China’s energy security is relatively better protected. According to Societe Generale’s estimates, even if the Strait of Hormuz is blocked and supply is interrupted, China’s large oil reserves could provide nearly 300 days of buffer against supply disruptions.

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

Of course, if we further examine the list of buyers affected by the Strait of Hormuz oil flow, several Southeast Asian countries including the Philippines, Myanmar, and Vietnam have even less buffer—only supporting 20-40 days.

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

In terms of stock volume, the entire Southeast Asia 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 has sufficient crude oil reserves, its refined product inventories are very limited.

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

Some responses are 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 fuel supply disruptions and price increases caused by the Iran conflict, Vietnam’s Ministry of Industry and 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.

The Thai 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.

Philippine President Marcos recently stated 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 urgent than investment promotion, becoming key priorities for the region in the coming years.

(Caixin, Xiao Xiang)