Iran War Triggers Global Rush to Build Strategic Oil Reserves, with Potential Demand Reaching 500 Million Barrels
Taylor Wilson
A near-total blockade of the Strait of Hormuz lasting three months pushed Brent crude close to $120/barrel and cut roughly a fifth of global oil and LNG supply; vulnerable importing nations are now racing to expand strategic petroleum reserves, with Reuters estimating new stockpiling plans could generate demand for roughly 500 million barrels — a multi-year global procurement wave is taking shape.
Who got hit — and who was shielded?
The Strait of Hormuz was nearly fully blocked for three months, severing about one-fifth of global oil and LNG supply.
The IEA's 32 member states coordinated a record release of 400 million barrels from strategic reserves — the single biggest factor in stabilising markets.
China, believed to hold the world's largest SPR (strategic petroleum reserve — a government-held emergency oil stockpile) at over 1 billion barrels, cut crude purchases by more than a third during the war, saving tens of billions of dollars. This means → countries with deep reserves could actively reduce buying and ride out the price spike; those without reserves had no choice but to absorb the blow.
India, Pakistan, Thailand and other reserve-light Asian economies paid heavily — subsidies, fuel rationing and shortened work weeks were all deployed.
How large is India's gap?
India is the world's third-largest oil importer, yet its strategic reserves cover only about 8 days of imports — more than 400 million barrels short of the IEA's 90-day benchmark. In plain terms = others have three months of supplies stocked; India barely has one week.
At $70/barrel, filling that gap would cost roughly $28 billion.
New Delhi has directed ONGC (Oil and Natural Gas Corporation) to build 1.75 million tonnes (about 13 million barrels) of new storage, expanding current emergency capacity by roughly a third. This means → India has taken its first step, but 13 million barrels against a 400-million-barrel shortfall is barely a rounding error.
What are other Asian nations doing?
Before the war, about 90% of Pakistan's oil and LNG imports came from the Middle East. Islamabad is now studying domestic storage expansion; meeting the 90-day standard would require roughly 35 million barrels of new capacity.
Australia — the only IEA member that has chronically missed the benchmark — has announced A$7 billion to lift reserves to at least 50 days of imports.
Singapore, Asia's largest refining hub, is also evaluating expanded strategic oil and gas storage. This reflects a stark reality: Asia depends on Middle Eastern energy for roughly 60% of its supply — almost no country in the region can escape unscathed when the strait is disrupted.
Why are oil producers also stockpiling abroad?
Gulf-state oil companies are seeking storage facilities outside the region to preserve export flexibility during crises. In plain terms = producers fear having oil they cannot ship, so they are pre-positioning barrels on customers' doorsteps.
Saudi Aramco already operates storage in Japan, South Korea, Egypt and northwest Europe, and has signalled it is considering further expansion.
This means → the global stockpiling race is not buyers-only; sellers are also reorganising their export networks.
Can 500 million barrels of demand actually materialise?
Reuters estimates that if every announced plan is fully executed, the combined demand would reach roughly 500 million barrels of crude and refined products.
Whether that converts to actual purchases hinges on two variables: each country's fiscal headroom and political will. This means → 500 million barrels is an upper-bound scenario; if budgets tighten or the sense of crisis fades, plans will shrink.
Whether the Strait of Hormuz becomes a geopolitical lever again will be the ultimate test of whether these stockpiling commitments hold.
Content is for reference only, not financial advice.