Hormuz tension threatens Asia's energy security

The crisis in the Persian Gulf, which has now exceeded seven weeks, had pushed China and India, the giants of oil imports in the region, to quickly develop temporary strategies. However, as these solutions are being exhausted one by one, the pressure on the energy security of both countries is steadily increasing.

China and India attempted to meet their oil and LPG needs by making direct shipment agreements with Iran and Russia when the conflict began. In particular, the fact that tanker traffic passing through the Strait of Hormuz has come to a near standstill has created risks even for China's private refineries under sanctions due to US pressure. For this reason, a significant decrease in the amount of stock held by these countries is observed every day.

India's energy dependence makes the situation even more fragile. India, which receives both crude oil and LPG used as cooking gas largely from Gulf countries, is trying to compensate for the resource deficit with tankers coming from Russia. These shipments can partially continue thanks to some exemptions applied by the US. Despite this, although stocks in refineries seem sufficient in the short term, the rise in prices has begun to impose heavy costs on refineries and has remained at levels well above the low prices seen after the Ukraine war.

While the stock of Russian oil held at sea was around 20 million barrels in February, this figure fell below 5 million barrels within a few weeks; experts state that the current stock may be around 3 million barrels. In addition, thanks to the special agreements India made with Iran, a significant advantage was provided in the safe passage of LPG and other products through Hormuz. However, after two Indian tankers were attacked recently, the country's administration sought diplomacy with Iran and decided against sending its empty tankers to the Gulf.

China, despite the strength of its energy stocks and reserves, is negatively affected by global price increases. Although China, which has state reserves exceeding 1 billion barrels, seems more comfortable in the short term for this reason, state refineries have resorted to cutting production due to rising costs and decreasing supply.

As the exit of Iranian oil from the Strait of Hormuz becomes increasingly difficult due to the American blockade, some private refineries in China are forced to reduce production due to both high prices and limited supply. The ongoing crisis is pushing Asia's giant economies to a more fragile point in terms of energy resources.