Asia scrambles to conserve energy as Iran war disrupts oil and gas supplies

Asian Nations Scramble to Secure Energy Supplies Amid Middle East Conflict

Countries across Asia are implementing emergency measures to conserve energy and shield consumers as escalating conflict in the Middle East severely disrupts crucial energy supplies, sending global markets into turmoil and driving prices higher.

The crisis has hit Asian economies particularly hard due to their heavy dependence on imported energy resources, much of which travels through the now-endangered Strait of Hormuz. Since Israeli and U.S. attacks on Iran began on February 28, followed by Iran’s retaliatory strikes against Israel and Gulf Arab nations, maritime traffic through this critical chokepoint has plummeted dramatically. Only about 90 vessels – primarily Indian, Pakistani, and Chinese-flagged – have successfully navigated the strait during this period.

“The countries that are exposed to that supply disruption are not so much in Europe, or in the Americas, they’re actually really in the Asia region,” explained Michael Williamson of the United Nations Economic and Social Commission for Asia and the Pacific. Ramnath Iyer from the U.S.-based Institute for Energy Economics and Financial Analysis warned that Asian nations should prepare for “cascading impacts into all economic activities.”

Japan faces particularly acute vulnerability, with approximately 93% of its oil imports passing through the strait. Gasoline prices have already surged to about 175 yen ($1.09) per liter, up from 144 yen ($0.91) just a month ago. The government has responded by releasing 15 days of private-sector oil stockpiles followed by a month’s worth from national reserves. While officials report roughly 250 days of reserves remained at the end of last year, public anxiety is mounting about potential shortages reminiscent of the 1970s oil crisis.

South Korea, which imports about 70% of its oil and 20% of its liquefied natural gas from the Middle East, has seen queues forming at cheaper gas stations as delivery workers, truckers, and greenhouse farmers struggle with rising costs. To mitigate disruptions, authorities have lifted caps on coal-fired power generation, planned increases in nuclear output, and are considering resuming Russian crude oil imports. Officials maintain that current reserves could sustain the country for about seven months.

China, despite being the largest volume user of the strait, remains relatively insulated from immediate shocks thanks to substantial strategic reserves and its growing renewable energy sector, which now accounts for approximately 30% of its power mix. Nevertheless, Chinese consumers are experiencing higher travel and fuel costs, with some airlines doubling ticket prices on popular international routes to offset surging fuel expenses.

Vietnam’s export-driven industrial sector is grappling with higher production costs as fuel and freight expenses rise. Manufacturers in steel, textiles, and footwear are facing increased input prices, with some suppliers pausing deliveries altogether. The transportation sector, agriculture, tourism, and passenger travel are all under strain, with authorities warning of potential jet fuel shortages. The government has implemented price controls to stabilize the market.

Thailand, where more than half of electricity generation relies on LNG (with 40% imported from the Middle East), has activated an emergency energy plan that includes suspending petroleum exports, increasing coal and hydropower generation, and mandating energy conservation in government offices. As the country turns to the costly spot market for LNG cargoes, experts predict inevitable price increases as national subsidy budgets deplete.

Indonesia has thus far maintained stable energy prices but analysts expect this relief to end shortly after Eid al-Fitr. The government faces a difficult choice between continuing costly consumer subsidies or scaling them back to preserve budget integrity—potentially triggering inflation.

The Philippines has implemented cash assistance programs, providing 5,000 pesos ($83) to approximately 139,000 tricycle taxi drivers in Manila to offset fuel costs, with plans to expand nationwide and include other transport sectors. Government offices have shifted to four-day work weeks to reduce energy consumption.

Pakistan has ordered two-week school closures, cut fuel allocations for government vehicles by half, and canceled the Pakistan Day parade in favor of a simple flag ceremony. Officials are exploring alternative supply routes, including increased imports from Saudi Arabia and shipments through the Red Sea port of Yanbu.

India has boosted domestic cooking gas production and prioritized household distribution, causing supply constraints for commercial users like hotels and restaurants. With nearly half of India’s crude oil and LNG imports passing through the strait, maintaining stable supplies remains critical for both daily life and broader economic activity.

Nepal’s state-run oil corporation has begun rationing cooking gas, filling cylinders to only half capacity to stretch supplies. Gasoline prices have increased by approximately 10%, and authorities are encouraging households to switch to induction cookers to reduce gas consumption.

As the conflict persists, Asian nations face mounting challenges in securing energy supplies while managing the economic impact on their populations and industries.