Middle East Conflict Triggers Asian Energy Crisis and Global Economic Concerns

From fuel caps to four-day work weeks, the Middle East conflict has left the world’s top crude oil importing region desperate to shore up supplies. Donald Trump has scrambled in recent days to reassure the world that the economic impact of his war on Iran can be contained. Sure, one of the most important waterways in global trade has, in effect, been shut for almost two weeks – but it might reopen before long. In the meantime, US oil-related sanctions on “some countries” will be lifted. And besides, the entire conflict could be over soon. Such vague claims, and the release of hundreds of millions of barrels of emergency crude from government reserves, soothed markets, at least for a while. Oil prices, which surged to four-year highs on Monday, fell back below $100 per barrel, before rising again. But the war continues. Several merchant ships have been struck in and around the strait of Hormuz. Iran’s Revolutionary Guards have declared they will not allow “one litre of oil” to be exported from the Middle East if US and Israeli attacks continue. Across Asia, the world’s top crude oil importing region, the rhetoric around the ramifications of this conflict is less important than the reality. In 2025 the continent relied on the Middle East for 59% of its crude imports, according to Kpler. The Middle East can’t be relied upon right now. The strait of Hormuz, through which about a fifth of the world’s oil supplies and seaborne gas tankers typically pass, remains all but closed for business. Some producers in the region, struggling to ship their oil out to the world, are reducing output. “The situation is certainly very worrying,” said Yousef Alshammari, the president of the London College of Energy Economics. Even when ship operators feel confident again to send tankers through the strait, oil producers “will need time to bring supply up to its pre-crisis levels”, he added. “The longer the strait remains closed, the more likely that these stocks will be exhausted, and prices will continue to rise, leading to major global economic crisis,” said Alshammari. “The only solution to this is to reopen the strait and enable navigation to resume.” Asian countries from Pakistan to South Korea have been forced to confront a brewing energy supply crisis. China, which has the world’s largest onshore crude stockpiles, is said to have received millions of barrels of oil from Iran since the war broke out. India reportedly ramped up its Russian crude imports after the US issued a waiver from sanctions, although hot food and drink is reportedly disappearing from menus across the country amid fears of a cooking fuel shortage. Japan, with a stockpile of 350m barrels, is releasing about 80m – equivalent to 45 days of supply – as part of the International Energy Agency’s largest ever release. But the relative comfort inside the continent’s dominant economies is not shared by many of their peers. South Korea is “highly dependent on global trade and energy imports from the Middle East”, its president, Lee Jae Myung, noted on Monday, as he announced its first cap on domestic fuel prices in almost three decades. Thailand’s oil fuel fund is spending tens of millions of dollars each day to keep fuel prices artificially low, subsidising consumers. The commerce minister, Suphajee Suthumpun, urged the public not to panic, according to the Bangkok Post, telling reporters that the government had prepared scenarios “to cope with any potential impact”. Bangladesh started rationing fuel sales last week in an effort to halt panic buying, and closed all universities as it sought to sustain the country’s supplies. The situation has become so serious that the country – which imports the vast majority of its fuel – has deployed the military at major oil depots and police around fuel stations. Myanmar’s junta introduced rationing, and banned half of private vehicles from the roads, allowing those with even-numbered plates to drive on even dates, and odd-numbered plates on odd dates. Pakistan is rolling out austerity measures, including school closures and only allowing government offices to operate for four days each week. “To stabilise the economy we have taken difficult decisions,” its prime minister, Shehbaz Sharif, said on Monday. Fuel tanker drivers complained of shortages earlier this week. “Iran has closed the border from their side,” one driver, Abdul Shakoor, told AFP. “The depot is lying empty.” Some public officials in the Philippines have moved to a four-day week as part of the country’s efforts to curb fuel consumption. Government agencies, state universities and colleges have also been told to reduce fuel consumption by at least 10%, including by setting air conditioning units no lower than 24 degrees. Vietnam has called on businesses to “encourage work-from-home when possible” to reduce the need for travel, in a sweeping remote-work drive reminiscent of the early days of the Covid-19 pandemic. It is also set to remove tariffs on foreign fuel until the end of April, as part of a bid by its government to help shore up energy supplies, amid lengthy lines at petrol stations and rapidly rising prices. Trump has promised light at the end of the tunnel for those trying to navigate this energy crunch. But Asian governments, companies and consumers remain very much in the dark – with no idea how long the tunnel is. Economic disruption is often contagious. The health of Asia’s economies, from whether companies are financially comfortable enough to import from overseas to whether citizens can afford a holiday, is felt far beyond their borders.