Asia scrambles to confront energy crisis unleashed by Iran war

Hind Al Soulia - Riyadh - MUMBAI — Asian countries from Pakistan to South Korea have been forced to confront a brewing energy supply crisis as 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 for almost two weeks.

President Donald Trump has scrambled in recent days to reassure the world that the economic impact of the US-Israel war on Iran can be contained.

Across Asia, the world’s top crude oil importing region, the rhetoric around the ramifications of this conflict is less important than the reality.

The region sources a whopping 60% of its oil from the Middle East. So as the price of energy soars, it’s taking action.

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.

Taking the long view, Beijing is accelerating cuts in carbon intensity over the next five years as it maintains its focus on renewable energy.

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.

New Delhi has invoked emergency powers to divert liquefied petroleum gas away from industrial users and toward households.

India relies heavily on imported LPG, much of which normally travels through the Strait of Hormuz, the strategic waterway linking the Gulf to global markets.

The Indian government has ordered refineries to increase LPG output and prioritize household supplies after disruptions linked to the conflict caused shortages for restaurants and businesses.

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.

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.

Pakistan has ordered a range of austerity measures from closing schools to shifting services online.

Ministers and government officials have been instructed to pay for their own petrol and diesel, ending the earlier practice where official vehicles ran on government fuel.

Additionally, the government has ordered that 60% of official vehicles be taken off the roads.

Fuel tanker drivers complained of shortages earlier this week.

Meanwhile, South Korea is imposing a fuel price cap for the first time in 30 years, as it seeks alternative sources of energy beyond the Strait of Hormuz.

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.

Elsewhere, Vietnam is calling on companies to encourage remote working.

Thailand has ordered government workers to save energy by suspending overseas trips and working from home.

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”.

The Philippines is urging personnel to hold virtual meetings instead. This comes after it rolled out a temporary four-day workweek for some government offices, with air-conditioning set no lower than 24°C (or 75°F).

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.

The United Nations is warning that if disruptions drag on, food and fertilizer prices will skyrocket and hit vulnerable economies in the region especially hard.