Saudi Arabia, as one of the largest oil producers in the world, has recently announced that it is seeking cooperation with other countries to increase its strategic oil reserves. This decision reflects major changes in the country's oil policy and is particularly significant following recent developments in the Middle East and threats from Iran.
History of Oil Production in Saudi Arabia
Saudi Arabia has averaged 8.295 million barrels of oil production per day since 1973, and this figure has currently decreased to about 8 million barrels per day. According to forecasts, Saudi Arabia expects oil demand to increase after the end of conflicts and is working on alternative export routes to bypass potential threats from Iran in the Strait of Hormuz and other strategic areas.
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IMEC Project and Saudi Arabia's Shift in Approach
One of the most important projects in this regard is the India-Middle East-Europe Economic Corridor (IMEC), which was introduced at the G20 summit in 2023. This project has been significantly accelerated due to regional tensions and the blockage of the Strait of Hormuz, and it is expected that about 60% of the container traffic that historically passed through the Strait of Hormuz will be redirected to this corridor.
Saudi Arabia is also seeking to increase the capacity of the 1200-kilometer East-West pipeline, which transports oil from eastern fields to the port of Yanbu on the Red Sea. The goal of this project is to increase the transfer capacity to 10 million barrels per day within the next two to three years.
Saudi Arabia's New Strategy for Oil Reserves
Saudi Arabia is seeking access to the strategic reserves of foreign countries, especially in Asia, to double its storage capacity abroad. This move means transferring large volumes of Saudi oil outside the Gulf region and storing it near key customers. For example, on October 26, Saudi Arabia signed an agreement to store crude oil in the Jurong rock caverns in Singapore starting from the second half of 2027, which can store up to 1.47 million cubic meters of liquid hydrocarbons.
This strategy represents a fundamental shift in Saudi Arabia's oil policy and indicates that the country can no longer fully rely on its domestic infrastructure. Given the ongoing attacks from Iran, this approach is particularly important for securing future oil supplies.
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