ASEAN Plans Joint Crude Oil Reserves Amid Supply Crisis

The Association of Southeast Asian Nations (ASEAN) has agreed to set up a joint crude oil stockpiling scheme in response to supply disruptions from the war in Iran, which has severely affected countries in the region. According to Crude Oil Prices Today | OilPrice.com, the scheme will comprise storage sites in Indonesia and Thailand from which ASEAN members can draw oil during periods of tight supply.

The system utilizes a ticket mechanism where member countries pay an advance fee to reserve the right to purchase specific volumes of oil or fuel from storage facilities operated by another member's energy company. This framework closely mirrors the European Union's joint stockpiling model.

Regional Impact and Implementation

The Philippines is set to be the first country to utilize the framework, having requested permission to purchase gasoline and diesel from the Indonesian and Thai storage sites during supply emergencies. The joint stockpiling initiative was originally proposed by Indonesia and received strong backing from Japan, an economy nearly entirely reliant on energy imports that has faced severe impacts from the supply crunch.

Asia has experienced the most severe fallout from the conflict that began on February 28, driven by its reliance on Middle East hydrocarbons. The prolonged absence of this primary supplier has forced Asian nations to source alternative supplies at elevated costs, driving up inflation and government expenditure on consumer subsidies.

Key facts

• ASEAN agreed to establish a joint crude oil stockpiling scheme to address supply disruptions stemming from the war in Iran.
• Storage sites will be located in Indonesia and Thailand, operating via a ticket system requiring advance reservation fees.
• The Philippines is the first member to request access to buy gasoline and diesel through the emergency storage arrangement.
• The initiative was initiated by Indonesia and supported by Japan amid broader regional energy security concerns.