Saudi Arabia will store crude in Singapore underground caverns from 2027 to secure supply amid Hormuz disruptions.
No barrels will be added by the arrangement before the second half of 2027, meaning the immediate impact on prices is small. However, the deal signals that producers and consumers anticipate the Strait of Hormuz risk to continue beyond the current conflict. With storage nearer to Asian refiners, Saudi Arabia could maintain supplies to key customers during future disruptions, protecting its regional market share against competitors. Over the longer term, a strategic stockpile in Singapore might lower the risk premium Asian buyers pay during supply scares and boost Singapore's role as a pricing and trading hub. For now, oil markets are still driven by the immediate disruption to Hormuz flows, which this deal does not address.
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After the Strait of Hormuz became unreliable, Saudi Arabia intends to position its crude near Asia.
Key details:
Saudi Arabia intends to store crude oil in underground caverns on Singapore's Jurong Island from the second half of 2027, a step meant to improve energy supply security across Asia as the ongoing war with Iran disrupts shipments via the Strait of Hormuz.
The plan was unveiled on Monday by the energy ministers of Saudi Arabia and Singapore during Singapore International Energy Week. Singapore's energy minister said the two countries had agreed in principle to establish the arrangement, which would enhance the resilience of Saudi supply chains in Southeast Asia and bolster Singapore's energy security in case of supply disruptions.
Saudi Aramco is scheduled to sign an MoU on Monday with Singapore's Energy Market Authority and Jurong Group, the state-linked developer of the island's industrial estate. The parties intend to complete negotiations within a few months.
The announcement underscores the pressure the conflict has put on Asia's energy supplies. The US-Israeli war with Iran has heavily interrupted flows through the Strait of Hormuz, a narrow waterway that transports a large portion of Gulf crude exports. Prior to the war, approximately two-thirds of Asia's crude oil originated in the Middle East, leaving the region's refiners and governments highly vulnerable to any disruption.
Storing Saudi crude in Singapore would make supplies accessible to major Asian buyers, providing the kingdom with a means to continue serving customers if Gulf export routes are obstructed or delayed. For Singapore, which is already a key refining and oil trading hub, the caverns would provide a strategic buffer for its energy system.
The storage facility will not start operations until the second half of 2027, so it does not provide any immediate relief from the current disruption. However, the deal indicates that both producers and consumers are preparing for an extended period where Gulf supply routes cannot be relied upon, and additional similar arrangements could follow as Asian importers seek to diversify their exposure.
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