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A very big and shocking news is coming out from the international energy market and geopolitics of the Middle East at this time. Saudi Arabia, one of the world’s largest oil exporting countries, now appears to be in deep crisis and panic regarding its oil security. Fearing continuous missile and drone attacks by Iran-backed Houthi rebels in the Red Sea and Yemen’s maritime areas, Saudi Arabia has made a major change in its strategy. According to reports, Saudi Arabia’s state oil company ‘Aramco’ is now going to build its huge reserves of crude oil in Singapore, a country in South-East Asia, away from its mainland. The move is being seen in energy markets around the world as Saudi Arabia’s defense against growing threats to its main oil bases and sea routes. After this sensational decision, question marks have been raised on global energy security and strategic calculations of big energy importing countries like India.
For Saudi Arabia, the Red Sea and its associated sea routes have been the biggest lifeline of its economy. Tankers supplying oil around the world pass through this route. But in the last few months, the way Yemen’s Houthi rebels have targeted this waterway for their attacks, it has given sleepless nights to the Gulf countries. The modern anti-ship missiles and suicide drones possessed by the Houthis are becoming a threat to the ships. There have been several drone attacks on oil installations and refineries of big companies like Saudi Arabia’s Aramco, which has posed a serious threat to its production capacity. In view of the insecurity and ever-increasing threat of these attacks on its home soil, the Saudi leadership has now taken this unprecedented and forced decision to establish its oil reserves at safe locations outside the country, so that in the event of any war or emergency, its oil supply cannot be completely disrupted.
There is a very deep and well-thought-out economic and strategic mathematics behind Saudi Arabia choosing Singapore for storing its huge oil reserves. Singapore is a major financial and trading center in Asia, located at the heart of the Far East and South-East Asian markets. In addition, Singapore’s political stability, advanced maritime infrastructure and strong security system make it considered one of the safest for investors and energy suppliers. Through this, Saudi Aramco wants to ensure continuous and immediate supply of oil without any interruption to Asian countries, especially huge markets like China, Japan, South Korea and India. If the main sea routes are disrupted due to the Houthis in the Middle East or a major regional war with Iran, this oil reserves already stored in Singapore can save Saudi Arabia from losing billions of dollars and maintain its market credibility.
Since India imports a large part of its total crude oil requirements from West Asia and mainly from Saudi Arabia, this geopolitical movement in the Gulf countries is sure to have a direct impact on New Delhi as well. When oil producing countries become so concerned about their own security and start keeping reserve stocks in far-off countries, it can lead to a huge increase in logistics costs and shipping expenses in the international market. Due to Houthi attacks, ships are already having to take the longer route to the Cape of Good Hope, which is consuming more time and money. While the availability of Saudi oil reserves in Singapore may sometimes provide immediate access to shipments to Asian buyers, in the long term this volatile environment in the Middle East poses significant risks to India due to energy inflation and crude oil price volatility, which Indian policymakers are keeping a close eye on.
This initiative by Saudi Arabia to build oil reserves in Singapore is a clear proof that the methods of conventional warfare have changed in the modern era and now non-state forces such as the Houthi rebels are also forcing the global superpowers and oil giants to change their tactics. The entire security structure of West Asia has collapsed because of Iran and its proxy war groups. Countries like Saudi Arabia, which were once considered invincible on the strength of their military and economic power, are today looking for refuge outside their borders to protect their energy assets. In the times to come, it will be very interesting to see whether this strategy saves Saudi Arabia from the terror of the Houthis or whether it marks the beginning of a new and dangerous economic conflict in the global energy market. One thing is completely clear that the energy axis of the world is now gradually moving towards new equations in search of geographical security and alternative routes.