How Saudi oil storage in Singapore could strengthen Asia’s energy security

Singapore's Ministry of Energy, Trade and Industry and Saudi Arabia's Ministry of Energy announced the proposed arrangement on October 26. As an initial step, Singapore's Energy Market Authority and JTC Corporation exchanged a memorandum of understanding with Saudi Arabian oil giant Aramco during Singapore International Energy Week.

The crude would be stored at Jurong Rock Caverns, Southeast Asia's first commercial underground storage facility for liquid hydrocarbons. Located 150 meters below ground, the facility can hold approximately 9 million barrels of crude oil and condensates. The amount of storage capacity to be allocated to Aramco has not been disclosed.

According to the two ministries, the arrangement would allow Singapore to draw on stored crude during supply disruptions while providing Aramco with a storage base closer to its Southeast Asian customers. Singapore's Minister for Energy, Trade and Industry Tan See Leng said negotiations were expected to conclude within a few months.

Middle East conflict exposes Singapore's vulnerabilities

The agreement comes after months of turmoil in Middle Eastern energy markets, which highlighted the risks facing Asian economies dependent on imported oil.

In an April 7 statement to Parliament, Singapore's Coordinating Minister for National Security, K. Shanmugam said more than half of the country's crude oil imports came from the Middle East. He noted that Brent crude prices had risen by as much as 70% following the escalation of hostilities on February 28, while attacks damaged major oil facilities in Saudi Arabia, Bahrain and other countries.

Singapore managed to secure alternative crude supplies, but at considerably higher prices. Shanmugam warned that even the reopening of the Strait of Hormuz would not immediately restore normal export volumes because damaged energy infrastructure would take time to repair.

The government had already announced plans to increase its fuel reserves. "It will be costly but we think it necessary," Shanmugam told lawmakers. He also explained that Singapore does not publicly disclose the size of its reserves, arguing that doing so would reveal how long the country could withstand a supply disruption.

The proposed Saudi storage arrangement would address a related vulnerability by placing additional crude oil within Singapore itself. However, crude reserves are primarily relevant to the country's refining industry rather than its electricity supply, which relies on imported natural gas for approximately 95% of generation.

Singapore's role as a major oil trading and refining center has helped it maintain supplies despite the turmoil. Shanmugam described the city-state as the world's third-largest oil trading hub and sixth-largest refinery export hub. He argued that Singapore's ability to supply refined petroleum products to countries that provide it with crude had created commercial ties that helped preserve access to oil during the crisis.

The new arrangement would supplement those trading relationships with physical stocks of Saudi crude already held in Singapore.

Saudi Arabia expands its Asian oil storage network

For Saudi Arabia, the Singapore arrangement is part of a broader effort to position crude oil closer to major Asian markets.

Aramco already operates similar storage arrangements in Japan and South Korea. In Japan, the state-backed Japan Organization for Metals and Energy Security leases 13 crude oil storage tanks in Okinawa to Aramco, providing capacity for approximately 8.2 million barrels. Under an agreement renewed for three years in November 2025, Japan receives preferential access to the stored oil during emergencies.

South Korea signed a comparable agreement in October 2023, allowing Aramco to store 5.3 million barrels of crude at facilities operated by the Korea National Oil Corporation in Ulsan. The arrangement gives South Korea priority purchasing rights during supply emergencies while allowing Aramco to use the facility to serve customers across Asia.

These agreements offer advantages to both sides. Aramco gains storage facilities near major buyers, reducing its reliance on shipments directly from the Gulf for every delivery. Host countries, meanwhile, can secure access to emergency supplies without necessarily purchasing and maintaining the entire inventory themselves.

Their geographical location has become particularly important following the 2026 Middle East conflict. Crude already stored in Japan, South Korea or Singapore lies beyond the Strait of Hormuz, through which much of the Gulf's oil exports normally pass.

If shipping through the strait is disrupted, inventories already in Asia can continue supplying local refiners without immediately requiring new shipments from the Gulf. For Saudi Arabia, overseas storage also provides greater flexibility in distributing crude among customers when export routes become unreliable.

Such facilities cannot eliminate the consequences of a prolonged supply disruption. Stored oil is finite, and replenishing inventories would remain difficult if Gulf shipping routes were blocked for an extended period. Nevertheless, having crude closer to customers can reduce the immediate impact of interruptions.

The Singapore agreement would extend this network into Southeast Asia, where the city-state already serves as a major center for refining, petroleum trading and regional fuel distribution.

Several important details remain unresolved. Unlike the agreements with Japan and South Korea, the proposed Singapore arrangement has not yet disclosed the volume of crude to be stored, its commercial terms or the precise conditions under which Singapore could access the oil in an emergency.

With operations expected to begin only in the second half of 2027, the agreement will do little to address current supply pressures. Its longer-term significance lies in a lesson reinforced by the 2026 crisis: access to international oil markets does not necessarily guarantee timely deliveries when major shipping routes are disrupted.

Earlier, Qazinform reported that Minister of Foreign Affairs of the Republic of Kazakhstan Mukhtar Tileuberdi received the Honorary Consul of the Republic of Singapore in Kazakhstan Talgat Chinikeyev. During the meeting, the parties discussed the activities of the Honorary Consulate and exchanged views on further strengthening bilateral cooperation between Kazakhstan and Singapore.