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Energy shock fears rise as the Iran war chokes supplies to Asia - AP News

📉 Global energy trade faces turmoil as war around the Persian Gulf disrupts oil and gas shipments, driving prices higher.

🌏 Asia is highly exposed to these disruptions because it relies heavily on imported fuel through the Strait of Hormuz.

🛢 Approximately 13 million barrels of oil per day flowed through the strait in 2025, representing about a third of global seaborne crude trade.

⚡ Roughly a fifth of the world's LNG also passes through the straits, with over 80% shipped to Asia in 2024 according to the U.S. EIA.

💰 Brent crude prices have jumped 15% to about $84 per barrel since the war began, marking the highest level since July 2024.

🇺🇸 President Trump stated the U.S. will offer risk insurance to shippers and may deploy its navy to protect vessels in the region.

⚠️ Experts warn that supply tightening could cause richer nations to outbid poorer ones, leaving vulnerable economies short of fuel.

🐼 China remains a major crude oil importer but has prioritized energy security, utilizing renewables and strategic reserves to mitigate shocks.

🇮🇳 India may resume purchases of Russian crude despite pressure from Washington, with reserves expected to last less than a month.

🔋 Taiwan's semiconductor industry remains vulnerable as the island relies nearly entirely on LNG imports and faces potential production halts in Qatar.

⚡ Japan is the second-largest LNG importer after South Korea, with 95% of its crude oil imports coming from abroad.

🇰🇷 South Korea sources around 70% of its crude oil and 20% of its LNG from the Middle East region.

🔋 Renewables provide under 10% of power in South Korea and Taiwan, highlighting reliance on fossil fuels despite energy transition efforts.

🚗 Developing countries like those in Southeast Asia face higher risks as supplies tighten and richer nations outbid them for cargoes.

🛑 In Manila, authorities banned non-essential travel and personal use of government cars to reduce fuel consumption amid price hikes.

⚠️ Thai officials urged the public to save energy as motorists waited in long lines at filling stations while prices climbed.

🍞 Higher food prices are a primary risk, as perishable goods face supply shocks alongside inflationary pressures on borrowing costs.

Bullish Signals
  • U.S. President Donald Trump has offered risk insurance to shippers and may deploy its navy to protect vessels, potentially mitigating some supply disruptions.
  • China maintains substantial strategic petroleum reserves and can source crude from alternatives like Russia, reducing the likelihood of an economy-wide shortage despite current disruptions.
  • Most Chinese shipments are already at sea, covering four to five months of demand, providing a buffer against immediate supply cuts.
  • Japan and South Korea have large energy supply stockpiles that serve as temporary buffers during the crisis.
  • Taiwan has announced sufficient fuel supplies for March and contingency plans for the future to manage potential shortfalls.
  • China imports about 1.4 million barrels per day from Iran last year, but its massive scale allows it to prioritize energy security with renewable alternatives.
  • Global oil supply remains sufficient overall, meaning sustained shortages are unlikely even as prices fluctuate.
Risk Factors
  • Global energy trade is in turmoil with Brent crude jumping 15% to about $84 per barrel, the highest level since July 2024, driven by war around the Persian Gulf.
  • Asia relies heavily on imported fuel shipped through the Strait of Hormuz, which carries a fifth of global trade in crude oil and over 80% of LNG shipped there in 2024.
  • The Iran war has caused disruptions that are cascading globally, potentially grinding economic activity to a halt as richer nations outbid poorer ones for scarce cargoes.
  • China imported about 1.4 million barrels per day from Iran last year; sustained price spikes would strain its transport, industry, and households despite having strategic reserves.
  • India has crude reserves to last less than a month, with the next two weeks critical if the conflict drags on, risking driving up fuel costs and broader inflation.
  • Developing, energy-hungry countries in Southeast Asia face the risk of being outbid by richer nations as supplies tighten, potentially leaving more vulnerable economies short of fuel.
  • Japan is highly dependent on imports, importing 2.34 million barrels of crude per day in January for about 95% of its total imports that month.
  • South Korea gets around 70% of its crude oil and 20% of its LNG from the Middle East, leaving it nearly entirely reliant on energy imports.
  • Taiwan sources about one-third of its LNG from Qatar, which halted production after attacks on its facilities, while energy-intensive industries like semiconductors remain vulnerable.
  • Renewables provide under 10% of power in South Korea and Taiwan and about 22% in Japan, meaning fossil fuels dominate and economies lack a natural hedge against disruption.
  • Officials in Singapore warned businesses and households to brace for higher energy bills, while in Manila authorities banned non-essential travel and personal use of government cars to cut fuel use.
  • Thailand officials urged the public to save energy as motorists lined up at filling stations with climbing prices, highlighting severe supply stress among delivery riders and drivers.
Full Analysis
Global energy markets are experiencing significant turmoil following escalating conflict around the Persian Gulf, which has disrupted oil and natural gas shipments critical for Asia's economy. The crisis centers on the Strait of Hormuz, a narrow waterway through which approximately 13 million barrels of oil per day moved in 2025, representing roughly a third of all seaborne crude trade. According to energy consultancy Kpler, this corridor also transports about a fifth of the world's liquified natural gas (LNG), with more than 80% of LNG shipments through the strait in 2024 destined for Asia. These disruptions have caused Brent crude prices to rise by 15% to approximately $84 per barrel, marking the highest level since July 2024. Asia remains particularly vulnerable due to its heavy reliance on imported fuel, with major economies facing potential supply chain fractures. China, the world's largest crude oil importer, imported about 1.4 million barrels per day from Iran last year, though Beijing has diversified sources including Russia and renewables. Analysts at Kpler suggest while China is unlikely to face sourcing shortages given its strategic reserves and existing cargo at sea, sustained price spikes could strain broader economic sectors like transport and industry. Similarly, India's crude reserves are estimated to last less than a month, with the coming two weeks described as critical for preventing inflationary pressures on perishable food supplies and household fuel costs. East Asian nations face acute exposure due to their dependence on Middle East energy flows. Japan imported 2.34 million barrels of crude per day in January, representing about 95% of its total imports that month, while South Korea relies on the Middle East for around 70% of its crude oil and 20% of its LNG. Taiwan sources approximately one-third of its LNG from Qatar, which halted production following facility attacks. Although Japan and South Korea maintain large stockpiles and Taiwan has sufficient reserves to cover March, analysts warn that energy-intensive industries remain fragile. Governments across the region are adopting a "prepare for the worst" stance, with measures ranging from travel bans in Manila to public appeals for energy conservation in Thailand, while experts caution that diversifying into renewables remains a critical long-term hedge against such disruptions.