I Geo-Economics & Chokepoints Asia-Pacific

Hormuz in its sixth month: the stock buffer is thinning for Asian importers

Institution: IEEJ (Institute of Energy Economics, Japan)
Author: Ken Koyama
Country · language: Japan · English
Affiliation: Independent foundation, policy-oriented

Summary

Koyama describes the Hormuz crisis as the first event in which oil and LNG supply were cut simultaneously and on a large scale, and characterises it as the largest supply disruption in the history of international energy markets. According to the piece, the understanding between the parties did not last: on 30 August the US struck military facilities in Iran for the first time since the end of July, and Iran retaliated against US bases in the region.

According to the figures Koyama cites, prices have risen by 7–8 dollars a barrel since the end of August; Brent climbed above 95 dollars and WTI above 91, and the LNG spot price reached a year high of around 26 dollars/MMBtu on 2 September. He lists four factors limiting the price rise: pipelines bypassing Hormuz, US exports, a sharp fall in Chinese imports and stock draws. He stresses, however, that US exports rely on strategic reserves and that stock draws have markedly lowered global inventory levels, reducing flexibility against new shocks. Because more than 90 per cent of Japan's crude imports have historically come from the Middle East, he regards the POWERR GX package announced on 26 August (supply diversification, more nuclear and renewables, Asia-wide joint stockholding arrangements) as critical.

Blind spot

What the West misses: Western commentary looks at price levels; for Asian importers the real danger is the erosion of the stock buffer and the return of Chinese demand. Weakness of this reading: it relegates the demand-collapse scenario to the background and presents the Japanese policy package uncritically.

Talay assessment

Bottom line

Koyama's core warning, the thinning inventory buffer, has been reinforced by later developments: Brent climbed from 95 dollars to near 108 dollars on 15 September, the Saudi East-West pipeline, the largest source of supply bypassing Hormuz, was shut by a drone attack, and the US strategic reserve stands at 285 million barrels. At least three of the four buffers he lists appear weakened. His weak point is sidelining the demand-collapse scenario, but while US–Iran tensions remain unresolved, the most likely path is prices staying high and volatile.

Likely effects

Asian importersNegative1–6 months
Japan, South Korea, the Philippines and Vietnam must buy at high prices while rebuilding stocks; the strain on subsidy budgets and external balances is rising.
Routes bypassing HormuzNegativeWeeks
The closure of the East-West pipeline has disabled the channel that compensated most for lost supply; the halt to Yanbu loadings directly affects buyers reliant on the Red Sea route.
US export bufferNegative1–6 months
As the author stresses, US exports rely on strategic reserve releases and domestic stock draws; with the reserve at 285 million barrels, the sustainability of this channel is limited.
TürkiyeNegativeWeeks
As an importer of oil and LNG, Türkiye faces renewed pressure on its energy bill and fuel-driven inflation with Brent above 100 dollars; higher LNG spot prices make winter purchases more expensive.

Possibilities, ranked

1
High, volatile prices as stocks keep depleting55%
Intermittent strikes continue and alternative routes operate partially; with stock draws ongoing, flexibility against new shocks keeps declining.
Watch: Weekly EIA inventory data and the strategic reserve level; the reopening date of the East-West pipeline
2
Second break on alternative routes35%
Exports on the Red Sea side also remain under attack; with a weaker stock buffer, price spikes are sharper than in earlier waves.
Watch: Yanbu loadings halted for weeks; tanker attacks in the Bab el-Mandeb
3
Weaker demand and easing tensions10%
The scenario the author sidelines: global growth slows, Chinese imports stay low and transit through Hormuz partly normalises; prices fall markedly.
Watch: A rise in daily vessel transits through the Strait of Hormuz; the temporary corridor beginning to operate

Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.

Original publication: eneken.ieej.or.jp · 4 September 2026

This page summarises the institution's view and does not reflect the view of Talay Insight. No direct quotation is used.