ASEAN's Crucial Role in the Gulf's Oil Export Future

The Gulf oil-producing countries are in a fierce competition to export crude oil and regain their share of critical markets, particularly in Southeast Asia. Despite hostilities between the US and Iran, Tehran is attempting to boost its oil exports, with 69-122 million barrels exported since June 19, including 53 million barrels on 'shadow fleet' tankers.

The Association of Southeast Asian Nations (ASEAN) holds a significant advantage in crude procurement from the Middle East due to its multitrillion-dollar economy and limited storage capacity. ASEAN-based refiners have been ramping up intake of US, Russian, African, and Latin American crude to compensate for supply disruptions in the Strait.

The Gulf countries, particularly Saudi Arabia and the UAE, are taking advantage of this situation by increasing their oil exports through ports outside the Strait. They are also diversifying their supplier options, which gives them a competitive edge over Iran. ASEAN's preference for Russian crude further limits Iran's prospects of winning over excess oil demand within the bloc.

ASEAN states have ample incentive to expand crude procurement partnerships with time-tested Gulf allies due to the region's push towards clean energy and the need to offset potential energy shocks. The Gulf countries' added success in accelerating production in recent weeks is also estimated to unlock new profits through high-demand markets, including ASEAN.