Iran War Forces Asia Into Energy Triage

The escalating war with Iran is pushing parts of the world into energy triage, forcing governments to choose where to cut demand or absorb costs while prioritizing dwindling supplies. Asia is particularly exposed due to its reliance on imported fuel shipped through the now-blocked Strait of Hormuz, a critical route for global trade in crude oil and liquified natural gas.

Governments across the region are scrambling to adjust by tallying oil reserves, conserving energy, competing for supplies, and trying to blunt prices. These adjustments bring difficult trade-offs: saving power may slow business activity, while prioritizing cooking gas for households can hurt restaurants and other businesses. Linh Nguyen of Control Risks warns that even modest constraints on energy use can create a drag on industrial activity.

In the Philippines, officials have switched to a four-day workweek to reduce government energy use by a fifth, with offices instructed to switch off computers during lunch breaks and keep air conditioning no lower than 24°C (75°F). Vietnam has urged people to work from home, while Thailand's prime minister has asked officials to take the stairs instead of elevators. These measures come at a cost, as seen in Hanoi where a vegetable seller notes that even a 10% rise in fuel costs will eat into her thin margins.

Japan and South Korea are releasing oil reserves to prevent fuel prices from surging. Japan began releasing about 45 days' worth of its vast strategic oil stockpile, while South Korea plans to release 22.46 million barrels under the International Energy Agency's largest-ever coordinated stock draw. However, analysts warn that tapping reserves is not a long-term solution and may only provide a temporary buffer.