Assessing oil supply security of South Asia

Highlights: • We develop a composite index for assessing the oil supply risk of South Asian countries. • A mathematical programming approach is used to constructing the index. • India is found to be the least oil vulnerable country. • Afghanistan and Bangladesh are the most oil vulnerable countries. Energy security assessment provides a benchmark for policy analysis and identifies the challenges for ensuring energy supplies as well. This paper develops a composite index for assessing the oil supply risk of South Asian countries. The index is based on a comprehensive set of indicators including the ratio of imported oil over GDP, geopolitical risk, market liquidity, GDP per capita, ratio of oil imports over consumption, diversification, oil price volatility, US$ volatility and transportation risk. Results reveal that India is the least oil vulnerable country while Afghanistan and Bangladesh are the most oil vulnerable countries. India's leading score reflects a higher potential to change the oil suppliers while Afghanistan, Bangladesh, Bhutan, and Nepal have the least score confirming them as the highest supply risk associated countries. Policies such as adopting renewable energy technologies, generating nuclear power, diversifying export sources and cutting down oil subsidies can help reduce the impact of oil supply risk.