Asian states may need to protect Mideast oil supply
It is rare that two events in a short period of time coincide to demonstrate clearly the slowly shifting sands of the global strategic balance. This month, just such a thing happened. On January 17, a former US ambassador to Israel, Martin Indyk, published an essay in The Washington Post. In it, he argued that the US need not be as committed to the Middle East as in the past because it no longer needed to rely on oil supplies from the region and Israel's security was now more assured. One sentence in particular stood out: "China and India need to be protecting the sea lanes between the Gulf and their ports, not the US Navy."
Four days later, on January 21, South Korea announced that it would expand the mission of its overseas counter-piracy unit to the Strait of Hormuz. The 300-strong Cheonghae Unit, aboard a 4,400-ton destroyer, was formed in 2009 and is mandated to protect shipping in the Gulf of Aden. It will now operate in the Persian Gulf to ensure the security of oil tankers heading for South Korea.
The two events were clear indicators of two separate but intertwined trends: first, that Asian states are increasingly reliant on Middle East energy supplies to fuel their economies; and second, that the US is, at least rhetorically, decreasingly interested in protecting those supplies. These two factors reflect the fact that a significant change is under way for the regional, and perhaps global, order. Indyk's article is a remarkable plea for the US to abdicate a responsibility it has willingly assumed since World War II: to ensure freedom of navigation and the security of a world order based on law and led by the US. It is also a realistic admission that while Washington may perceive declining strategic interests in the Middle East, Asian states - particularly the largest economies of China, Japan, India and South Korea - are increasingly reliant on and involved in the region.
Energy is a key part of this shift in strategic calculation for major Asian states, not least China. Given its rapid economic growth and limited internal energy resources, China became a net importer of oil products in 1993; by 2017 it was the world's largest importer, overtaking the US.
Even China's slowing economy has failed to dent the rapid increase in its oil imports; 2019 was the 17th successive record year, with 10.12 million barrels imported every day, a 9.5% increase on the previous year.
China looks to the Middle East to satisfy this inexorable thirst for oil, importing nearly 50% of its needs from the region. Shipments from Saudi Arabia, China's top supplier, increased by more than 50% in a single year to November 2019. Other Middle East states such as Iran, Iraq, Oman, Kuwait and the United Arab Emirates all regularly appear in the top 10 list of China's oil suppliers.
China is not the Gulf's only customer. Japan, the world's third-largest economy, imports more than 90% of its energy needs. Nearly 40% of this comes from oil, of which more than 75% is imported from five Middle East states: Saudi Arabia, the UAE, Qatar, Kuwait and Iran.
The same is true for South Korea, which in 2018 imported nearly 75% of its oil, mostly from Saudi Arabia, Kuwait, Iraq and the UAE.
India, another significant but energy-poor economy in the Indo-Pacific region, relies almost entirely on the Gulf for its imported oil. India's dependence on imports rose to 84% in 2018-19. The country's top four suppliers were Iraq, Saudi Arabia, Iran and the UAE, which together provided more than 60% of the country's oil imports, demonstrating the vital role Middle Eastern oil plays in India's economy.
It's not just about oil, either. China, Japan, South Korea and India are the four largest importers of liquefied natural gas in the world. Qatar is the main supplier to both South Korea and India and a top-three supplier to both China and Japan.
All this makes the Gulf perhaps the most strategically vital region for Asia's biggest economies. More than two-thirds of South Korea's and 60% of Japan's energy imports, as well as 80% of crude oil bound for China, currently come through the Strait of Hormuz, a narrow waterway beset by tension and regular threats by Iran to close it down. Any significant and prolonged disruption to the flow of oil exports through the strait would have devastating consequences for their economies.
Meanwhile, Middle Eastern countries are having to pay more attention to the needs and demands of the Asian states, which are fast becoming their top customers. Just as the Middle East is now a more significant concern for governments in Asian capitals, so Asia is now a greater consideration in the strategic calculations made in Gulf states.