As the Middle East crisis drags on and disrupts oil supplies, governments across Asia have rolled out emergency energy-saving measures, including school closures and switching to a four-day workweek. As the world's largest energy-importing region, Asia is expected to take the hardest hit from the crisis.
According to local media on the 11th, the Strait of Hormuz has been effectively shut down amid clashes between the United States and Israel and Iran, prompting Asian countries to unveil a series of emergency steps. The Strait of Hormuz is a strategic chokepoint through which about 27% of the world's seaborne oil shipments pass, and 90% of that volume is destined for Asia.
The Vietnam government temporarily cut the import tariff on some petroleum products to 0% to stabilize prices. Under the decree, the tariff rate on unleaded gasoline and gasoline blendstock will be reduced from 10% to 0%, and diesel and jet fuel from 7% to 0%. The Civil Aviation Authority of Vietnam (CAAV) reportedly granted a 100% exemption from the environmental protection tax on jet fuel through the end of May and recommended a price cap on domestic flights.
The National Economic and Social Development Council (NESDC) of Thailand approved telework for civil servants handling non-public service duties and urged a halt to overseas business trips by civil servants for the time being, except for essential schedules. The Energy Ministry released a conservation manual recommending setting indoor air-conditioning temperatures to 26–27 Celsius and wearing short-sleeve attire, and the Public Relations Department plans to run an energy-saving campaign on TV and radio accordingly.
The Philippines government also declared a four-day workweek for all government agencies, except personnel providing essential public-facing services such as police and fire departments, starting on the 9th. Government offices announced plans to cut fuel and electricity consumption by 10% to 20%, and restrictions on elevator use and a rule to maintain cooling at 24 degrees have reportedly been implemented. Offline meetings that can be moved online, including training and business trips, are also banned.
With few alternative suppliers and facing stockpile constraints, Asian countries appear to be announcing policies prioritizing livelihoods. Pakistan reduced working days, ordered school closures, and unveiled about 10 austerity measures, including temporarily suspending salary payments for Cabinet Ministers. India reportedly invoked emergency powers to divert industrial liquefied petroleum gas (LPG) for household use.
However, despite government measures, signs of fuel hoarding are emerging on the ground. In many cities, including Manila and Hanoi, long lines are forming as people try to stock up on gasoline, and gas stations near the Thailand-Myanmar border have even posted notices banning Myanmar vehicles from refueling.
West Texas Intermediate (WTI), which hovered around $70 in mid-Feb., has swung sharply since the U.S.-Iran clashes. WTI topped $100 per barrel on the 8th and is currently holding around $80. The shift is seen as a result of eased anxiety after U.S. President Donald Trump mentioned the possibility of an early end to the war.
Still, there are concerns that the crisis could trigger the worst economic downturn on record. Amin Nasser, chief executive officer (CEO) of Saudi Aramco, said, "If such turmoil persists, there could be devastating consequences for the global oil market," adding, "There have been supply disruptions in the past, but this crisis is the biggest facing the Middle East oil and gas industry."
Meanwhile, as international oil prices whipsaw on the back of the Hormuz blockade, the International Energy Agency (IEA) has reportedly proposed the largest-ever release of strategic reserves. In response, 32 IEA member countries, including Korea, convened an emergency meeting and are said to be coordinating each country's release allocations. A joint release of strategic reserves will be finalized by the IEA Governing Board, the agency's top decision-making body, on the 11th (local time), and any agreement requires unanimity.