Why Saudi Arabia and the UAE Want to Store More Oil in Japan and South Korea

South Korea is pursuing a similar diversification approach. Seoul said it had arranged 273 million barrels of crude and 2.1 million tonnes of naphtha through the end of the year using routes outside Hormuz, while also discussing bypass pipelines and storage outside the strait.

The proposal builds on existing Japan-Gulf arrangements

Japan and Abu Dhabi began a joint-storage project in Kagoshima in 2009. The arrangement was designed to give Japan emergency access to crude while providing Abu Dhabi National Oil Company with an Asian supply base. Japan and the UAE later renewed and expanded the project, with ADNOC's leased capacity reported at more than 8 million barrels.

Japan also has a history of storing Saudi crude in Okinawa. A Saudi Aramco agreement allowed the company to hold up to 6.3 million barrels there, while a similar arrangement existed for ADNOC in Kyushu.

The current initiative therefore appears to extend an established model rather than create an entirely new one. Japan and the UAE agreed in 2026 to discuss higher UAE crude supplies and expanded joint stockpiles, but the reporting did not establish the final volume, financing or operating terms.

Why a tenfold expansion would be difficult

If the reported 8-million-barrel holdings were expanded tenfold, each country would seek space for roughly 80 million barrels in Japan. That would be a major logistical project, not simply a matter of filling unused tanks.

The parties would need to resolve several practical questions:

• Tank and port capacity: New or repurposed tanks, tanker berths, pipelines and loading systems could be required.
• Crude compatibility: Storage and refinery equipment must be able to handle the specific grades, blending requirements and quality controls for Saudi and Emirati crude.
• Competition with Japanese inventories: Overseas producer stocks would share infrastructure with commercial refinery inventories and Japan's national and private emergency reserves.
• Release rules: A crisis agreement would need to establish who owns the crude, who can release it, which customers receive it first and whether Japanese emergency-stock obligations take priority.
• Cost sharing: Construction, leases, insurance, financing, maintenance, inventory turnover and potential quality losses would all need to be allocated contractually.

The public reporting confirms discussions and existing cooperation, not a completed tenfold expansion.

Pipelines reduce Hormuz exposure—but do not eliminate it

Saudi Arabia and the UAE are also relying on infrastructure that can move some crude toward outlets outside the strait. Japan's refining industry has called for diversified supplies and viable alternatives to crude transported through Hormuz, including support for bypass pipeline projects. Gulf states are likewise expanding alternative routes, although construction is expensive and takes years.

Those routes provide redundancy, but they do not make the region immune to maritime disruption. Oil leaving Saudi Arabia through Red Sea routes may still need to pass the Bab el-Mandeb, while UAE exports routed through Fujairah still depend on port capacity and safe shipping beyond the Gulf of Oman.

The Red Sea has already demonstrated the problem. A reported Houthi blockade affecting Saudi shipping at Bab el-Mandeb created a second threat to Asian oil deliveries while refiners were still dealing with the Hormuz disruption. A route that bypasses one chokepoint can therefore expose exporters to another.

The broader lesson is that pipelines, storage tanks and alternative terminals work best as layers. None can independently replace unrestricted Hormuz traffic at the scale required by Gulf exporters and Asian refiners.

How tougher U.S. sanctions on Iran fit into the strategy

Washington's sanctions campaign adds another reason for Asian buyers to secure non-Iranian crude outside the conflict zone. The U.S. Treasury sanctioned China's Hengli Petrochemical refinery along with roughly 40 shipping companies and vessels linked to Iran's oil trade. President Donald Trump and Treasury Secretary Scott Bessent have also signaled further measures described as unprecedented, although the final scope—including possible action involving additional Chinese refineries or banks—was not established in the available reporting.

For Iran, tighter restrictions on oil sales, shipping and payments could reduce foreign-exchange earnings while the conflict raises transport and consumer costs. That combination could worsen inflation and shortages and increase pressure for fuel-demand controls. The available evidence does not establish that nationwide energy rationing has already been imposed, so that outcome should be treated as a risk rather than a confirmed development.

For Saudi Arabia, the UAE, Japan and South Korea, the sanctions environment makes supply-chain certainty more valuable. But sanctions can also complicate storage arrangements by increasing scrutiny of cargo ownership, payment channels, insurers, vessels and the ultimate destination of crude.

What the plan means for global energy security

Overseas stockpiles, alternative suppliers, bypass pipelines and strategic reserves can reduce the duration and economic impact of a Hormuz shock. They cannot quickly restore all the flows lost during a prolonged closure. One estimate put the reduction in global oil flows at about 11 million barrels per day after measures to offset the disruption.

That is why the reported Japan and South Korea discussions matter even if they do not proceed at the proposed scale. They signal a shift from treating Hormuz as a temporary shipping risk to treating it as a structural supply-chain vulnerability.

The feasible long-term response is a portfolio: more storage close to Asian refineries, additional pipeline and terminal capacity, diversified crude purchases, better emergency release rules and lower oil demand. The immediate limitation is that these measures take time, money and coordination. If Hormuz, the Red Sea, insurance markets, sanctions compliance and Asian refinery inventories tighten simultaneously, no single stockpile can provide a complete buffer.