$163 million. That's what oil companies spent in March to lease drilling rights across 1.3 million acres of Alaska's Arctic tundra—the highest bid total in more than two decades for the National Petroleum Reserve, according to the Bureau of Land Management. The surprise wasn't just the money. It was who showed up: ExxonMobil and Shell, two supermajors that hadn't touched Alaska leases in years.
The sale, held as the Strait of Hormuz remained effectively closed and oil inventories drained at record pace, marks a turning point for a region once written off as too remote, too expensive, and too politically fraught. Now, with Middle East supply stranded and prices whipsawing between $90 and $144 per barrel, Alaska looks less like a frontier gamble and more like a hedge against the next crisis. But the scramble for secure barrels isn't just happening in the Arctic. It's exposing a starker divide: countries with strategic reserves, and countries realizing—too late—that they don't have any.
Why Are Oil Giants Betting on the Arctic Now?
The Alaska lease sale was the first in the National Petroleum Reserve since 2019, and it drew 11 companies bidding on 625 tracts, OilPrice.com reported. ExxonMobil and Shell were the headline surprises. Shell hasn't drilled in Alaska since its failed offshore campaign more than a decade ago, and ExxonMobil hadn't bid on leases in years, according to the Anchorage Daily News. Both companies spent millions to secure positions, with Repsol and Shell Frontier submitting more than $90 million in combined bids.
Bob Fryklund, a top oil and gas analyst at S&P Global Energy, told the Alaska Beacon the North Slope has been "kind of a sleeper basin" until recent discoveries expanded known resources. The timing matters. With more than 14 million barrels per day of Gulf oil shut in due to the Hormuz blockade—what the IEA calls the largest supply disruption in history—Alaska offers something increasingly rare: barrels that don't transit a war zone.
It won't be quick. Projects in the Arctic typically take five to ten years to move from lease to first oil. But the message from the auction is clear: oil companies are planning for a world where Middle East supply remains unreliable well into the 2030s. Environmental groups have filed lawsuits challenging the sale, particularly over tracts near Teshekpuk Lake, a sensitive caribou habitat. A federal judge reinstated conservation protections for the area on May 19, leaving the fate of some leases uncertain.
Who Has Oil in Reserve—and Who Doesn't?
While Alaska's oil won't flow for years, the Hormuz crisis is forcing countries to tap what they have now. On May 27, a Greek-flagged supertanker called the Arosa set off from the Gulf of Mexico carrying 616,000 barrels of U.S. Strategic Petroleum Reserve crude bound for the Philippines—the first SPR shipment to Asia since November 2022, Reuters reported. The cargo is part of a 172 million barrel release authorized in March as the U.S. and other IEA members responded to the supply shock.
The Philippines has no strategic petroleum reserve of its own. It relies on mandatory minimum inventory requirements imposed on private oil companies, which currently hold about 45 days of diesel stocks, according to energy analysts. The country declared a national energy emergency in March after the Hormuz closure cut off access to Middle Eastern crude, which supplies 98% of its oil imports.
Pakistan is in a similar bind. Despite relying on the Strait of Hormuz for up to 90% of its oil and LNG imports, Pakistan has zero strategic reserves, Reuters reported Monday. The country's energy ministry has now proposed building government-funded reserves financed by a 10-rupee-per-liter levy on petroleum, which would generate about $700 million annually. The plan also calls for refineries to hold 15 days of crude stocks and oil marketing companies to maintain 30 days of finished products, with rules phased in by June 2028.
Petroleum Minister Ali Pervaiz Malik acknowledged last week that building reserves is "easier said than done" for a country in an IMF program with severe fiscal constraints. Pakistan shared the framework with Saudi Aramco, Abu Dhabi National Oil Corp, QatarEnergy, PetroChina, Vitol, and Trafigura. Most declined to comment.
The contrast is stark. Japan holds 263 million barrels in government reserves—enough to cover more than 200 days of imports, according to the EIA. China's strategic and commercial inventories combined exceed 1.3 billion barrels. The U.S. SPR, even after the recent drawdown, still holds roughly 409 million barrels. Countries without reserves aren't just exposed to price shocks. They're scrambling to secure supply on a spot market where every cargo is contested.
