As the White House lays the groundwork for extending the Iranian port blockade, Asian nations will brace for further fallout.
Oil prices are rising again after US President Donald Trump said he would maintain a naval blockade of Iranian ports and ships unless Iran agrees to curb its nuclear program.
Asian countries heavily dependent on energy exports through the Strait of Hormuz are bearing the brunt of the economic pain from the nine-week war. Everything from oil and natural gas to plastics and fertilizers is in short supply.
Brent crude oil is currently trading at $120 a barrel. Oil prices rose more than 6% on Wednesday, with Brent crude hitting a one-month high. Before the war, 80% of the oil and gas flowing through the Strait of Hormuz went to Asia.
Regional airlines are under pressure and scrambling to react as the price of jet fuel more than doubles. Airlines such as Qantas, Air New Zealand, Vietnam Airlines and AirAsia have already cut back on flights.
Asia, which is also home to major producers of copper and nickel, is suffering from a shortage of sulfur, a key byproduct of Gulf energy that is effectively locked away by the conflict. Indonesia, the world’s largest nickel producer, is currently cutting production.
To protect its major energy-consuming industries and consumers, South Korea is diversifying its energy supplies from the Strait of Hormuz and increasing imports from countries such as the United States, Algeria, and Oman.
China was able to weather the Iranian energy shock better than its Asian neighbors thanks to its vast strategic reserves, coal intake, and power grid diversification. However, the economic giant is vulnerable to soaring prices and slowing export demand as a result of the ongoing conflict.
Rising fuel costs are impacting the lives and livelihoods of many people in the region, from Thai farmers to Filipino drivers. As the turmoil drags on, human suffering across Asia will deepen.
Some 8.8 million people in the Asia-Pacific region are at risk of falling into poverty due to war, according to a United Nations report released earlier this month.
