Saudi Arabia has signed an agreement with the Singaporean government to store crude oil in underground rock caverns in Singapore, a move aimed at bolstering the resilience of oil supply chains and mitigating the risk of export disruptions amid escalating conflicts in the Gulf and Red Sea and continued attacks on Saudi infrastructure. According to a Bloomberg report, the Saudi oil will be stored in the Jurong rock caverns, located within a petrochemical complex in southern Singapore, with deliveries expected to begin in the second half of 2027.

The caverns have a storage capacity of approximately 1.47 million cubic meters of crude oil, condensates, and other liquids, equivalent to about 9 million barrels, providing strategic storage near one of Asia’s most important energy-consuming markets. This move comes at a time when Saudi Arabia’s energy industry is facing increasing pressure as a result of the Gulf War, the repercussions of which have extended to the Red Sea, with the Houthis continuing to target ships and infrastructure related to the conflict.

Saudi Aramco is seeking to increase its storage capacity outside the Kingdom, given the disruptions to oil exports caused by military tensions and the disruption of commercial shipping. Security risks have led the company to rely on ship-to-ship transfers in the Gulf of Oman to the east, in addition to sending tankers through the Suez Canal to the west, in an effort to maintain the flow of supplies to global markets.

These moves reflect the importance of diversifying logistics routes and storage sites, especially with the increasing risks associated with vital sea lanes, most notably the Strait of Hormuz and the Red Sea.

Singapore’s Energy Minister Tan See Ling said the agreement enhances the resilience of Saudi Arabia’s oil supply chain to Southeast Asia and contributes to Singapore’s energy security and its ability to withstand supply disruptions. For his part, Saudi Energy Minister Prince Abdulaziz bin Salman affirmed that storing oil near key Asian markets will bolster the resilience of the Saudi supply network and support energy security and preparedness for any future disruptions.

He added that cooperation between the two countries has opportunities for expansion in the coming period. Asia is one of the most important markets for Aramco and for Middle Eastern oil producers, which means that supply disruptions resulting from the war have a significant impact on the region, especially given the reliance of Asian economies on energy imports from the Gulf. Thus, the agreement reflects Saudi Arabia’s focus on strengthening its logistical infrastructure beyond its borders, in an effort to mitigate the impact of geopolitical risks on oil exports and ensure the continued flow of crude to Asian markets despite escalating military tensions in the region.