East Asia Seeks New Energy Suppliers Amid Global Crisis

East Asian countries are beginning to seek new suppliers and energy sources amid global supply disruptions caused by conflicts in the Middle East, which have triggered surges in prices and energy supply uncertainty. Data from the U.S. Energy Information Administration indicates that more than 80 per cent of liquefied natural gas (LNG) passing through the Strait of Hormuz in 2024 is destined for Asia. The majority of this supply heads to Japan, South Korea, and Taiwan, which heavily rely on energy imports to support their industries. Japan is relying on strategic oil reserves as its primary line of defence. The country has reserves equivalent to about 254 days of consumption, a system built since the Arab oil crisis in the 1970s. This week, the Japanese government began releasing reserves equivalent to around 45 days to curb fuel price spikes amid a slowdown in crude oil imports. The last similar action was taken following Russia’s invasion of Ukraine in 2022. This policy is expected to maintain the continuity of Japan’s energy-intensive industries, from automotive to steel and heavy machinery. Major companies such as Toyota, Mitsubishi, and Nippon Steel are highly dependent on stable energy supplies. Meanwhile, South Korea plans to release 22.46 million barrels from its reserves as part of the largest coordination ever undertaken by the International Energy Agency. However, analysts warn that using energy reserves is not a long-term solution. This step only provides temporary cushioning for refineries against supply disruptions, without increasing a country’s total energy availability unless replacements can be purchased anew. Energy analyst from Kpler, Muyu Xu, stated that if the crisis continues, crude oil shortages could recur. Releasing reserves may only sustain refinery operations for a few additional weeks, but companies are likely to have to slow production if disruptions persist. “The fundamental difficulties will not be resolved by this measure,” said Mika Ohbayashi, Director of Japan’s Renewable Energy Institute.