Developing economies race to build strategic oil reserves after supply shocks

South Africa has unveiled its largest strategic petroleum storage initiative in decades. Earlier this month, the government approved a draft Strategic Petroleum Stocks Policy that would require the state-owned South African National Petroleum Company to maintain reserves equivalent to 60 days of net oil imports, with a long-term goal of increasing that to 90 days.

India is also expanding its emergency reserves. State-owned Oil and Natural Gas Corporation (ONGC) has announced plans to build a new 1.75 million metric ton, or roughly 13 million barrels, strategic petroleum reserve in Mangalore. The project will significantly increase India's storage capacity as the country seeks to better protect itself from future disruptions to crude imports.

While substantial for emerging economies, analysts say such volumes would still be insufficient to offset a prolonged disruption of oil flows from the Persian Gulf.

Other developing countries are pursuing similar measures.

Bangladesh is working to increase its strategic fuel storage capacity from about 60 days of consumption to 90 days by 2027 through the construction of new storage facilities, upgrades to existing infrastructure, and leasing additional tanks, according to the Bangladesh Sangbad Sangstha.

Pakistan has launched a tender to hire consultants for the country's first strategic petroleum reserve as part of a broader plan to improve energy security and reduce vulnerability to supply disruptions.

In the Philippines, the government is advancing plans for a Philippine Strategic Petroleum Reserve (PSPR), which officials say would strengthen the country's energy security and could also turn it into a regional oil storage hub. Energy Secretary Sharon Garin told a Senate committee that the government is in talks with the Maharlika Investment Corp., the Philippine National Oil Co., Japanese and Middle Eastern partners, and other foreign companies interested in the project. The initial reserve is expected to hold about 1 million barrels, with construction potentially completed by late 2027 or early 2028. The Department of Energy is also proposing a 60-day government fuel supply requirement that could be expanded over time.

Morocco is also moving to strengthen its fuel security. In May, Energy Transition and Sustainable Development Minister Leila Benali told parliament that the government plans to invest hundreds of millions of dollars to expand the country's fuel storage capacity.

Vietnam is pursuing a similar strategy. Prime Minister Pham Minh Chinh has ordered the construction of additional oil and petroleum storage facilities beyond those already planned in Thanh Hoa Province as the government seeks to expand national reserves.

Earlier, Qazinform News Agency reported that oil surged as US-Iran conflict rattled energy markets.