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US, Israel war on Iran
This Week in AsiaEconomics

Asia’s energy supply at breaking point as US blockades Hormuz

Nearly 90 per cent of the region’s crude oil is now at risk as stalled peace talks and a naval stand-off raise the spectre of stagflation

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A liquefied natural gas tanker is seen at a port in Yokohama, Japan’s Kanagawa prefecture, on April 8. Photo: AFP
Biman Mukherji
Washington’s naval blockade of the Strait of Hormuz is threatening to tip Asia into its worst energy crisis in living memory, with peace talks on the Iran war stalled and no clear timeline for when oil flows might resume.
The United States moved to seize control of the flashpoint waterway on Monday night, with US President Donald Trump framing the move as a way to force Iran to open the strait and accept a deal to end the war.

Iran responded by threatening all ports in the Persian Gulf and the Gulf of Oman, with the country’s military and Revolutionary Guards issuing a statement saying “no ports in the region will be safe”.

The strait carries roughly a quarter of global seaborne crude oil and one-fifth of all LNG shipments. But for Asia, it is even more vital: nearly 90 per cent of the region’s crude oil passes through Hormuz, with China, India, Japan and South Korea alone accounting for three-quarters of that flow.
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A prolonged closure will not merely raise energy bills but ripple through industries across the Asia-Pacific, according to experts.

“APAC’s exposure is concentrated in crude oil and refined petroleum products, feeding directly into manufacturing input costs, transport and trade financing,” risk management consultancy Fitch Solutions warned in a research note on Monday.

Supply crunch

Supplies are already tightening fast. The conflict has removed 10 million barrels per day of crude from the market compared to January, according to ANZ Bank, with benchmark Brent crude hovering around US$100 per barrel as of Tuesday.

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