Asia-Pacific oil and gas markets have built enough buffers to withstand near-term disruptions from the Iran war, supported by strategic petroleum reserves, diversified crude sourcing and government intervention, although prolonged disruption to key shipping routes could expose vulnerabilities across the region, according to analysts at S&P Global Ratings.
The assessment comes as energy markets contend with disruption around the Strait of Hormuz and the possibility of continued instability in the Red Sea. While countries across Asia-Pacific have varying levels of dependence on Middle Eastern supplies, strategic reserves and alternative sourcing have provided a cushion.
China has around 1.3 billion barrels of reserves and has room to sustain lower crude imports for an extended period. Crystal Wong, Associate Director, Lead Analyst, Oil and Gas, China, S&P Global Ratings, said, “Reserve can last upto 3 years.” The country's resilience will also depend on traffic through the Strait of Hormuz and developments in its domestic refining sector.
S&P Global Ratings' presentation showed significant differences in the size of petroleum buffers across the region. As of June 2026, India had reserves equivalent to around 60 days, compared with approximately 120 days for China, 202 days for Japan and 208 days for South Korea. Thailand had around 110 days and the Philippines about 45 days.
South Korea has meanwhile reduced its exposure through changes in sourcing. Ji Cheong, Associate Director, Lead Analyst, Oil and Gas, Korea, S&P Global Ratings, said, “The country has diversified its crude sources.” Its dependence on Middle Eastern crude has fallen below 50 per cent.
Southeast Asian economies also have buffers against an extended disruption. Pauline Tang, Associate Director, Lead Analyst, Oil and Gas, Southeast Asia, S&P Global Ratings, said, “Thailand has about 110 days of reserve, while Philippines 45 days, Singapore does not disclose.” These markets could withstand roughly three months of a Strait of Hormuz closure after finding alternative supply sources.
Singapore's refining capacity of about 1.2 million barrels of crude per day provides an additional cushion for domestic supply. However, continuing disruption in the Red Sea remains a risk, particularly if multiple trade routes face pressure simultaneously.
India is also relatively well placed to handle near-term supply disruption. Shruti Zatakia, Associate Director, Lead Analyst, Oil and Gas, India, S&P Global Ratings, said, “We see limited supply disruption risk over next 6 months.”
Indian refiners have tapped spot contracts from Russia, Latin America and South Africa, while domestic demand conditions remain steady. Refineries operated at full capacity in the previous quarter, while India's strategic petroleum reserves provide another buffer against potential supply shocks.
Across the region, governments have also stepped up measures aimed at limiting the impact of the energy shock. “One of the notable developments is governments in the region are proactive to counter the impact of the tension,” said Charles Chang, Managing Director, Greater China Country Lead, S&P Global Ratings.
Government measures range from energy-saving campaigns and export controls to subsidies and greater intervention by national oil companies. S&P, however, cautioned that subsidised prices can delay demand destruction, while price caps and subsidies can weigh on national oil companies' balance sheets and eventually government finances.
Upstream Gains, Downstream Vulnerabilities Diverge Across APAC
The impact of the conflict is increasingly diverging between upstream producers and downstream refiners, as higher energy prices benefit companies producing oil and gas while increasing feedstock and marketing pressures further down the value chain.
Australia represents one of the clearest examples of downstream vulnerability. “We are most exposed from refined products perspective,” said Richard Creed, Director, Lead Analyst, Energy and Commodities, Australia, S&P Global Ratings.
Pump prices in Australia remain high despite Brent crude trading below its earlier peak. The country continues to rely on refined-product imports from Southeast Asia, an arrangement that is working for now as neighbouring markets continue supplying it. However, a sufficiently sharp increase in energy prices could raise broader recession risks.
Australian upstream producers could benefit from stronger prices, although additional gas supply cannot immediately enter the market because of the lag involved in bringing production online. This contrast between Australia's upstream strength and its downstream dependence remains an important vulnerability.
Southeast Asia presents a more varied picture. Upstream producers continue to benefit, while Thailand has integrated producers with exposure across both upstream and downstream businesses. Several other Southeast Asian markets, however, have relatively limited upstream sectors.
Malaysia has significant upstream exposure relative to downstream operations, while refining margins remain strong. Indonesia faces a different challenge. Ker Liang Chan, Associate Director, Lead Analyst, Oil and Gas, South and Southeast Asia, S&P Global Ratings, said the country faces fiscal pressure as its crude production exceeds its domestic refining capacity.
Indonesia has stepped up biofuel blending to 50 per cent as part of its response, while subsidised fuels remain a significant part of its domestic market.
India is similarly seeing a divergence, but between private and state-owned refiners. Government-owned refiners have faced marketing losses that have largely wiped out gains from refining operations. Pump prices have increased only around 3–5 per cent, leaving state-owned refiners to absorb much of the increase in crude costs.
The broader regional trend is also visible in import and refinery data. S&P Global Ratings said oil import volumes across key APAC countries remain around 25–30 per cent below year-ago levels, coinciding with lower refinery utilisation. Refined-product imports are around 20–25 per cent lower year-on-year, with the decline attributed largely to lost volumes from the Middle East.
The ability of APAC economies to manage a prolonged conflict will therefore depend not merely on how much crude is available globally, but on whether alternative trade routes remain open, refining systems can keep operating and governments can continue cushioning consumers without placing excessive pressure on corporate and sovereign balance sheets.