Saudi Arabia is strengthening its strategic presence in Asian energy markets, with its intention to store crude oil in Singapore, starting in the second half of 2027, according to what was revealed by the Saudi Minister of Energy and Minister of Industry and Mineral Resources, Prince Abdulaziz bin Salman.
Experts who spoke to Asharq Al-Awsat believe that the step goes beyond providing oil reserves near consuming markets, to enhancing the reliability of Saudi supplies and increasing their flexibility in the face of geopolitical turmoil and maritime navigation risks, in addition to reassuring markets and consolidating buyers’ confidence. Especially in Asian markets.
On Monday, the Saudi Ministry of Energy and the Singapore Ministry of Energy, Trade and Industry announced their intention to make arrangements to store Saudi crude oil in the Jurong Rock Recesses on Jurong Island in Singapore, with storage operations to begin in the second half of 2027. In a first step towards implementing the arrangements, representatives of the Energy Market Authority, the Singaporean GTC Corporation, and Saudi Aramco, exchanged memorandums of understanding during the Singapore International Energy Week.
Under the proposed arrangements, quantities of Saudi crude will be stored at the Jurong Caves facility located under Jurong Island off the southern coast of Singapore. According to the joint statement, this step would enhance the durability and reliability of Saudi crude supplies to Southeast Asia, in addition to allowing the storage to be utilized to meet Singapore’s energy needs, in the event of supply disruptions.
Specialists believe that the presence of Saudi stock in this regional center for energy trade provides additional options for managing supplies and responding to the needs of buyers when shipping routes are disrupted or oil flows are disrupted, although its direct impact on export quantities may remain limited. On the other hand, the strategic value of the initiative is to enhance the security of supplies, support the continuity of long-term contracts, and consolidate Saudi Arabia’s position as a reliable supplier to Asian markets.
Saudi-Singapore cooperation also provides opportunities to expand areas of trade and investment between the two countries, and opens additional horizons for cooperation in the energy sector with East Asian countries, at a time when the flexibility of supply chains and the ability to deal with geopolitical risks and maritime navigation disturbances is becoming increasingly important.
The strategic importance of this step, in the eyes of specialists, goes beyond enhancing the flexibility of supplies and providing additional options for managing exports, to consolidating the confidence of Asian buyers in Saudi Arabia’s ability to fulfill its obligations even in times of turmoil. In this context, Dr. Ibrahim bin Saleh Al-Omar, Professor of Economics at Qassim University and General Manager of Shara Company for Economic Research and Studies, believes that the initiative represents what he described as a “deal of trust,” which goes beyond storing crude oil near consuming markets to enhancing guarantees of continuity of supplies and protecting the Kingdom’s market share.
Al-Omar explained that, through this step, Saudi Arabia is placing a portion of its oil near its largest market, allowing Asian buyers to access supplies when sea lanes are disturbed or tanker traffic is disrupted, instead of waiting for shipments to arrive via routes that may be affected by crises. He said that this advantage represents the core of the strategic importance of the initiative.
He pointed out that Asia was dependent on the Middle East for about two-thirds of its oil imports before the war, which makes ensuring continuity of supplies a crucial factor for buyers in times of crisis, in addition to prices. He added that Saudi Arabia is enhancing its ability to meet this need through a storage network extending from Japan and South Korea to Singapore.
Al-Omar said that this step supports Saudi Arabia’s position among major oil suppliers, explaining that markets in times of turmoil tend to reward the most reliable supplier, not necessarily the lowest price. But he ruled out that the initiative would lead to a significant increase in the quantities of Saudi exports.
He added that the available storage capacity is equivalent, according to his estimate, to the Kingdom’s exports in about two days, while storage operations will not begin before the second half of 2027. He believed that the main gain is to protect market share, enhance the continuity of long-term contracts, and limit potential losses when supplies are disrupted. Pointing out that maintaining customers during crises helps consolidate supply relationships after they end.
In addition to the initiative's role in enhancing buyer confidence and protecting the Kingdom's market share, its importance also stands out in expanding supply management options and increasing the ability to respond to disturbances in energy markets. In this context, Dr. Khaled Ramadan, an economic expert and head of the International Center for Strategic Studies in Cairo, believes that storing Saudi crude oil in the Jurong rocky hollows in Singapore represents a strategic step that enhances the Kingdom’s presence in Asian markets, gives it greater flexibility in managing shipments, and ensuring its access to buyers.
Ramadan explained that the importance of the initiative lies in expanding the Saudi warehousing presence in the heart of Asia, and bringing supplies closer to major consumer markets, giving Aramco broader options for managing shipments and responding quickly to any disturbances in trade or maritime transport routes. He added that the step represents a proactive measure to enhance energy security and protect supply chains from potential risks.
He pointed out that storage in Singapore complements the existing Saudi storage centers in Japan and South Korea, which contributes to building a more efficient and reliable network to meet the needs of the Asian markets, which account for the largest portion of the Kingdom’s oil exports. He pointed out that this network enhances Saudi Arabia’s ability to maintain its position as a reliable oil supplier. Especially in times of turmoil when it is increasingly important to ensure continuity of supply.
Ramadan stressed that the ability to deliver oil to buyers more quickly, while reducing reliance on traditional routes alone, enhances the attractiveness of Saudi crude and supports customer confidence. However, he pointed out that the direct impact of the initiative on the volume of exports may remain limited in the short term, while its importance in the medium term is to support the stability and gradual growth of exports, and enhance opportunities for concluding long-term contracts.
In the context of enhancing supply security and raising its ability to confront geopolitical risks, Dr. Abdul Rahman Baeshen, head of the Shorouk Center for Economic Studies, believes that Saudi Arabia’s tendency to store crude oil in Singapore reflects a strategic vision that goes beyond securing supplies to supporting the stability of global energy markets.
Baeshen explained that this step represents an economic tool to hedge against sudden shocks in energy markets and limit the repercussions of unrest resulting from conflicts and tensions in different regions of the world, thus enhancing the Kingdom’s ability to meet the needs of the markets in exceptional circumstances.
He pointed out that the initiative reflects Saudi Arabia's awareness of its responsibility towards global markets, and also allows it to expand its presence in East, Central and South Asia. According to Baeshen, this would support the dependence of major consumers, such as China, Japan and India, on Saudi supplies during crises.
He added that the presence of Saudi stock in Singapore gives the Kingdom additional flexibility in managing supplies to major markets, at a time when the turmoil resulting from the war in the Middle East is pushing countries to enhance energy security and protect supply routes. He believed that the step helps reduce the pressures imposed by exceptional events, whether resulting from natural disasters or man-made crises.
Baeshen pointed out that the initiative supports Saudi Arabia’s position among the world’s leading oil suppliers, and provides additional elements for the growth of the Saudi economy and foreign oil trade, as well as enhancing its ability to deal with the challenges posed by the unrest in the Strait of Hormuz and conflicts in the Middle East region.
For his part, Saudi businessman Abdullah bin Zaid Al-Mulaihi, CEO of Al Tamayoz Holding Company, said that the initiative to store Saudi crude oil in Singapore reflects the strategic outlook of Saudi oil policy.
Al-Melehi added that storing quantities of Saudi crude near Asian markets would send messages of reassurance to global energy markets and enhance the Kingdom’s presence among major consumers. Especially in light of the challenges facing supply chains and maritime trade movement.
He explained that establishing oil reserves in a location outside conflict areas gives Saudi Arabia greater flexibility in managing supplies, and helps it respond quickly to market needs. Especially in light of geopolitical tensions and maritime navigation disturbances. This also contributes to protecting the Kingdom’s economic interests and supporting global energy security.
Al-Melehi pointed out that the timing of the initiative acquires additional importance in light of the disturbances taking place in the waterways, explaining that storage near consuming markets provides additional options to meet demand and reduce the effects of disruption to transport routes.
He believed that this step supports the smooth flow of Saudi oil exports, and opens the way for their future growth in accordance with developments in global demand and production levels, as well as helping to maintain market shares and enhance the confidence of regional and international partners.
Al-Melehi stressed that Saudi Arabia will remain a major hub in oil production and supporting the balance of global energy markets, based on its role in meeting global demand and its ability to adapt to variables that affect supplies.
