The disruption of global oil flows through the Strait of Hormuz has renewed calls for ASEAN to establish a practical and enforceable regional petroleum reserve, as Southeast Asia confronts the risks of relying heavily on external energy supplies during periods of geopolitical instability.
In an analysis by energy specialist Jamil A Ghani, the 2026 Middle East conflict is described as a major test of ASEAN’s energy-security architecture. Before the crisis, around 60% of Southeast Asia’s crude oil imports and 45% of its petroleum-product supply were linked to Middle Eastern crude, leaving the region exposed when shipments through one of the world’s most important energy corridors were disrupted.
Hormuz Crisis Highlights ASEAN’s Energy Exposure
The Strait of Hormuz remains a critical artery for global energy trade. In 2025, approximately 20 million barrels of oil passed through the strait each day, representing roughly a quarter of global seaborne oil trade.
When hostilities erupted on 28 February 2026, oil flows through the strategic waterway fell sharply. By 11 March, 32 members of the International Energy Agency (IEA) responded with a record emergency release of 400 million barrels from their reserves.
The episode highlighted a major difference between ASEAN and economies with established strategic petroleum stockpiles: Southeast Asia currently has no comparable operational common reserve capable of releasing emergency supplies collectively when normal markets are severely disrupted.
ASEAN Has a Framework — But Needs an Operational Mechanism
Regional petroleum-security cooperation is not a new concept.
ASEAN has developed petroleum-security arrangements dating back to 1986 and 2009, while a new ASEAN Framework Agreement on Petroleum Security was signed in 2025. However, the latest framework has yet to enter into force.
ASEAN leaders also discussed the possibility of establishing a regional fuel reserve in May 2026. Malaysia’s Investment, Trade and Industry Minister Johari Abdul Ghani indicated that private-sector participation would be important and suggested that implementation could initially involve three or four like-minded ASEAN countries rather than waiting for all member states to participate simultaneously.
Such an approach could allow ASEAN to begin with a smaller pilot mechanism before expanding it into a wider regional system.
Malaysia Could Become a Strategic Pilot Location
Malaysia has been identified as a potential starting point for such a model because of its existing storage infrastructure, refining capabilities and logistics network.
According to figures cited by Malaysia’s Finance Ministry, the country consumes around 700,000 barrels of oil per day while producing approximately 350,000 barrels. Domestic production accounts for about 48% of crude supply, while another 38% has been linked to supplies passing through the Strait of Hormuz.
Malaysia also imports petroleum products including petrol, diesel, liquefied petroleum gas and aviation fuel, meaning that domestic oil and gas production does not completely shield the economy from international supply disruptions.
Prime Minister Anwar Ibrahim confirmed in July that the government was studying the establishment of a national petroleum reserve as part of efforts to strengthen long-term energy security amid geopolitical and global supply-chain uncertainties.
Commercial Stocks Are Not the Same as Strategic Reserves
One of the central arguments for establishing a formal reserve is the distinction between normal commercial inventories and fuel specifically secured for emergencies.
Malaysia’s retail and petrol-station inventories have been estimated at around three days of supply, while traders have crude-supply commitments covering roughly two months. However, future contracted shipments cannot necessarily provide the same security as physical reserves with legally defined emergency release rights.
A strategic reserve therefore does not simply mean having petroleum somewhere within the country. It requires clear arrangements governing how much fuel is available, where it is stored, who controls it and under what circumstances it can be released.
Such mechanisms become particularly important when commercial markets stop functioning normally or when shipping disruptions prevent contracted supplies from arriving as scheduled.
Public-Private Model Could Reduce Costs
Building energy resilience does not necessarily require governments to purchase and own every barrel of emergency petroleum.
One potential approach would combine government-controlled stocks with mandatory industry inventories and contractual rights over commercially held petroleum.
Jamil has previously proposed that Malaysia consider a hybrid strategic reserve, under which major refiners, importers and distributors maintain minimum emergency stocks while the government controls a smaller reserve governed by clear rules on release and replenishment.
Such a system could utilise existing private-sector storage infrastructure, reducing the need for governments to construct entirely new facilities while still ensuring that emergency supplies are physically available when required.
For ASEAN, a similar structure could potentially combine national reserves, private-sector stocks and bilateral or regional stockholding agreements.
Existing Infrastructure Could Support Regional Stockpiling
ASEAN may also be able to leverage infrastructure that already exists across member states.
The article points to precedents for locating regional projects within individual ASEAN countries, while earlier research by the Economic Research Institute for ASEAN and East Asia (ERIA) proposed mechanisms including bilateral stockpiling and petroleum “ticketing” arrangements involving ASEAN, Japan and South Korea.
Under such models, countries do not necessarily need to physically store all emergency fuel within their own borders. Instead, participating governments could obtain enforceable rights to designated stocks stored elsewhere, provided that the fuel is audited, accessible and capable of being delivered during a crisis.
This could offer ASEAN a more flexible and financially realistic pathway towards regional energy resilience.
Energy Security Is Also an Economic Issue
Oil-supply disruptions can create consequences extending far beyond petrol stations.
Higher crude prices can increase transportation and production costs, raise inflation and place additional pressure on government finances where fuel subsidies are used to protect consumers.
Malaysia experienced this pressure during the 2026 disruption. The Finance Ministry reported that RON95 and diesel subsidies reached RM7.5 billion in April, while petroleum-product subsidies were projected to potentially approach RM40 billion for 2026 if prevailing conditions continued.
This means a major oil shock creates two interconnected risks: ensuring sufficient physical fuel supplies while managing the fiscal cost of protecting households and businesses from rapidly rising energy prices.
A credible reserve mechanism could therefore become part of ASEAN’s wider strategy for economic resilience, not merely an emergency energy measure.
Building ASEAN Energy Resilience Before the Next Crisis
The Hormuz disruption has demonstrated how geopolitical events thousands of kilometres from Southeast Asia can quickly affect regional economies.
ASEAN already possesses many of the foundations needed for greater energy cooperation, including petroleum-security agreements, substantial refining and storage infrastructure, major national energy companies and existing regional coordination mechanisms.
The challenge is transforming those foundations into an operational system with predetermined stockholding requirements, release conditions, auditing procedures and delivery rights.
Starting with a smaller group of participating countries could provide a practical way forward, allowing ASEAN to test how shared reserves and emergency supply mechanisms operate before developing a broader regional framework.
Looking Ahead
The debate over strategic petroleum reserves ultimately reflects a larger question about how ASEAN prepares for increasingly unpredictable global disruptions.
A regional reserve does not necessarily require governments to own enormous quantities of oil. Instead, an effective system could combine public reserves, industry-held stocks, existing commercial storage and legally enforceable access arrangements to ensure petroleum can be delivered when conventional supply chains fail.
For Malaysia, developing a national reserve while participating in a regional pilot could strengthen domestic energy security and provide valuable experience for a future ASEAN-wide mechanism.
The 2026 Hormuz crisis has provided a clear warning. The next step for ASEAN is ensuring that when another major disruption occurs, the region has not merely agreements on paper, but a petroleum-security system capable of working when it is needed most.
