MediumVI Energy Politics & Supply Security26 October 2026, Monday
Aramco signs a memorandum to store crude in Singapore's rock caverns
Aramco, Singapore's Energy Market Authority and JTC signed a memorandum of understanding on 26 October to store Saudi crude in the Jurong Rock Caverns. Storage could begin in the second half of 2027; neither the volume nor the cost was disclosed.
According to Anadolu Agency, Singapore's minister for energy, trade and industry, Tan See Leng, set out the joint intent on 26 October at the Singapore Energy Conference. Arab News reports that the memorandum was signed on 26 October during Singapore International Energy Week and is a first step rather than a final agreement. Tan said the parties aim to close the negotiations within a few months, so towards the start of 2027. JTC puts the caverns 150 metres beneath Jurong Island with room for 1.47 million cubic metres of liquid hydrocarbons; the share going to Saudi crude was not disclosed.
The 26 October step shows Saudi supply assurance changing location. An analysis published on OilPrice.com on 26 October says Aramco aims to double its overseas storage capacity, with the kingdom accepting that delivery cannot rest on its own geography and security alone. Arab News reports that Aramco and Japan's JOGMEC extended their roughly 8.2 million barrel storage agreement in Okinawa by 3 years; the partnership began in 2010. The same report notes that Asia sourced about two thirds of its oil from the Middle East before the war.
Singapore is building its own buffer under a plan running to 2030. Anadolu Agency quotes Tan saying the Hormuz crisis will not be the last supply disruption; the country plans to raise LNG capacity by 50% with a second terminal by 2030. Arab News reports that Singapore renewed its LNG memorandum with QatarEnergy a week earlier and set up 1 joint energy task force with ADNOC. OilPrice.com puts Saudi output at about 8 million barrels a day at present, with Riyadh also weighing a widening of the East–West pipeline to 10 million barrels a day within 2–3 years.
Talay assessment
Bottom line
Riyadh is moving supply assurance from Gulf production to the customer's shoreline in Asia, on the assumption that the Hormuz and Red Sea routes both stay fragile. The memorandum is not binding and no volume was given, so it leaves the near-term supply balance untouched. The real effect lands after 2027, when the first barrel delivered to an Asian buyer in a crisis already sits on that buyer's coast.
Likely effects
- Asian supply securityPositive6 months+
From 2027 the stock held in Singapore gives Southeast Asia a first delivery that does not depend on chokepoint risk during a crisis.
- Saudi market sharePositive6 months+
A barrel stored on the customer's coast steers an Asian buyer to Saudi crude first in a crisis and hands Riyadh a delivery edge over rival producers.
- Today's risk premiumUncertainWeeks
Because the memorandum is not binding and no volume was disclosed, it changes neither today's supply gap nor the risk premium per barrel.
Possibilities, ranked
- 1Final agreement within months60%
The parties finish the negotiations, volume and timing are published, and storage starts in the second half of 2027.
Watch: Singapore and Aramco announcing the final agreement and the volume
- 2The volume stays symbolic25%
The agreement is signed but the Saudi share is confined to a small part of the cavern capacity.
Watch: The announced volume as a share of the 1.47 million cubic metre capacity
- 3Negotiations drag on15%
Price or legal terms stretch the talks and the 2027 timetable slips.
Watch: A delay to the second-half 2027 start date
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Cavern capacity▲ 1.47 mn m³
- Okinawa storage▲ ~8.2 mn barrels