Global Rush to Build Oil Reserves as Countries Fear Future Disruptions

The Iran war has triggered a global rush to build oil reserves as countries seek to protect themselves against future disruptions.

Vulnerable nations, such as India and Pakistan, which rely heavily on imported oil, are moving to expand their strategic petroleum reserve (SPR) capacity to mitigate the impact of supply shocks.

The International Energy Agency (IEA) has a 90-day standard for SPRs, but many countries fall short. India's current reserve covers just eight days of imports, while Pakistan relies on the Middle East for about 90% of its oil and LNG imports.

China, which is not an IEA member, has built what is believed to be the world's largest SPR, holding over a billion barrels. This 'rainy day fund' helped insulate China from economic distress during the war, as it reduced crude purchases by more than a third and drew down reserves by less than the import drop implied.

Even energy producers are moving in this direction, with Gulf national oil companies seeking more storage outside the region to preserve export flexibility in a crisis. Saudi Aramco has signalled its consideration of further expansion.