Energy security does not require governments to own every barrel. But it does require an enforceable, audited, and physically deliverable right to enough barrels when normal markets stop functioning.
From Jamil A Ghani
The 2026 Middle East conflict exposed a weakness in Southeast Asia’s energy architecture. In 2025, around 20 million barrels of oil moved through Hormuz each day, roughly a quarter of global seaborne trade.
After hostilities began on Feb 28, flows collapsed. On March 11, 32 International Energy Agency members responded with a record 400-million-barrel emergency release, however, months later, shipping remains constrained.
Asean has no comparable operational common petroleum stockpile. Before the crisis, about 60% of Southeast Asia’s crude imports and 45% of its oil-product supply were linked to Middle Eastern crude. Commercial supply arrangements alone cannot fully address that exposure.
Asean is not starting from zero. Petroleum-security agreements date to 1986 and 2009.
A new Asean Framework Agreement on Petroleum Security was signed in 2025 but is not yet in force.
In May, Asean leaders discussed a regional fuel reserve, while investment, trade and industry minister Johari Ghani said private-sector participation would be necessary and Asean could begin with three or four like-minded countries.
Further, Asean has precedent for locating regional projects in member states, including Malaysia’s Bintulu fertilizer complex serving regional needs.
In 2016, the Economic Research Institute for Asean and East Asia (Eria) proposed ticketing and bilateral stockpiling among Asean, Japan and South Korea. Japan and the Philippines are cooperating on national and Asean-wide stockpiling, while Eria develops a regional roadmap.
Putrajaya has managed the disruption, but adequate supply today is not a strategic reserve. The economy ministry says retail and petrol-station stocks cover around three days, while traders have crude-supply commitments of roughly two months.
The government is assessing strategic stockpiling needs. Fuel in Malaysia, future cargoes and a reserve with pre-agreed release rights are different things.
Putrajaya is now studying a national petroleum reserve. The finance ministry said RON95 and diesel subsidies peaked at RM7.5 billion in April, while the government projected petroleum-product subsidies could approach RM40 billion in 2026 if prevailing conditions persist.
A supply shock, therefore, creates both physical and fiscal exposure.
Malaysia merits consideration as an initial test. The finance ministry said in April that the country consumes around 700,000 barrels of oil a day but produces about 350,000.
Domestic production accounted for 48% of crude supply, while 38% came through Hormuz. Malaysia also imports petrol, diesel, LPG and jet fuel.
A pilot could strengthen national supply resilience while using existing Malaysian storage and logistics infrastructure and give Putrajaya experience in shaping any wider Asean mechanism.
The answer should not be a huge state-owned stockpile. The Netherlands offers a flexible model. The Netherlands Petroleum Stockpiling Agency (COVA) has an obligation to maintain at least 4,100 kilotonnes of crude-oil-equivalent strategic stocks, while industry must hold at least another 653 kilotonnes COE. Using the IEA’s average conversion for crude oil, these correspond to approximately 30.2 million and 4.8 million barrels respectively.
Cova rents commercial storage and can also use limited Compulsory Storage Obligation tickets, giving it rights over specified physical stocks held by others during a crisis.
A ticket is an enforceable right over a defined quantity and quality of petroleum held at an agreed location for a set period. The operator maintains the contracted quantity, manages storage and quality, and may rotate the stock provided the qualifying volume remains available.
This can reduce upfront government expenditure, but the fuel must exist, cannot be double-counted and must be physically deliverable.
New Zealand offers another precedent. It has used oil tickets since 2007 and now combines mandatory importer stocks with a government-controlled strategic diesel reserve.
Malaysia could test such a hybrid model using existing infrastructure before committing to large new construction. For example, Johor already has several million cubic metres of liquid-storage infrastructure, deepwater access and established petroleum logistics.
Johor’s proximity to Singapore’s established oil trading and maritime market is another advantage. It provides access to traders and shipping services needed to source, and move reserve stocks, while storage and stock-management activity remain in Malaysia.
Using established infrastructure would allow Malaysia to move faster. A pilot could test auditing, stock rotation, release and cross-border delivery before large sums are committed to purpose-built storage. New facilities may eventually be needed, but credibility can be built first by proving reserved barrels can be delivered.
Malaysia could, therefore, propose a three-layer pilot system: government-controlled strategic stocks; mandatory or contracted industry inventories; and ticketed commercial stocks giving Malaysia and participating countries enforceable rights over specified petroleum.
The target should be measured in days of emergency cover, not an arbitrary percentage of tank capacity.
A regional system also needs sovereign protection. A ticket held by another Asean country over fuel stored in Malaysia has limited value if that fuel cannot leave during a crisis. Cross-border arrangements need government-to-government guarantees.
While the Singapore-New Zealand Agreement on Trade in Essential Supplies (Aotes) is not an oil-ticket agreement, it illustrates binding commitments on essential supplies, including fuel.
Asean need not wait for all 11 members. Malaysia and a few willing states could test the model first. An independent operator, selected competitively, would reinforce commercial neutrality.
Every ticket should correspond to verifiable petroleum, with double-counting prohibited and release rights agreed before a crisis.
The choice is not between an expensive reserve and a cost-free status quo. It is between governments owning every barrel, industry carrying part of the burden, or governments purchasing enforceable rights over additional commercial stocks.
Energy security does not require governments to own every barrel. But it does require an enforceable, audited and physically deliverable right to enough barrels when normal markets stop functioning. - FMT
Jamil A Ghani is a PhD candidate at the S Rajaratnam School of International Studies, Nanyang Technological University, Singapore.
The views expressed are those of the writer and do not necessarily reflect those of MMKtT.
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