The Asset Specificity Trap: Refinery Complexity and Strategic Adaptation in Asia During the 2026 Gulf Energy Crisis

Abstract

The 2026 disruption of oil and gas flows through the Strait of Hormuz exposed a strategic vulnerability that is often obscured by conventional measures of energy security: access to replacement barrels does not necessarily imply that downstream assets can process them efficiently. This study examines how refinery configuration shaped adaptation across four Asian cases—India, South Korea, Vietnam, and Pakistan—during the disruption. Drawing on Transaction Cost Economics, the paper treats refinery assets as highly specific commitments, while using refinery complexity as an indicator of embedded operational optionality rather than as a direct inverse measure of specificity. A comparative multiple-case design traces two distinct adaptation pathways. Highly complex refining systems relied more heavily on internal reconfiguration, product-slate flexibility, and diversified procurement. Lower-complexity systems also adapted, but relied more on emergency sourcing, inventory drawdown, imported products, and public or macroeconomic buffers. The central finding is not that complexity determines survival. Rather, complexity influences how adaptation occurs and where its costs are recorded. The paper contributes the concept of adaptation-cost location, which is developed as an interpretive construct drawn from the comparative case evidence. Building on this construct, the paper proposes a complexity-adjusted supply-risk disclosure framework for strategic management accounting; this framework is offered as a normative implication for practice rather than as a management accounting mechanism directly observed in the four cases. It also identifies joint stockpiling and geographically distributed storage as lower-capital substitutes for immediate refinery upgrading in vulnerable importing economies.