Asia Braces for Energy Crisis as Iran War Disrupts Strait of Hormuz

Countries across Asia are scrambling to conserve energy and protect consumers as the ongoing conflict involving Iran and attacks on critical energy infrastructure disrupt supplies and drive up prices. The crisis is disproportionately impacting Asia due to its heavy reliance on imported energy, much of which travels through the Strait of Hormuz, a vital waterway now facing significant strain.

Strait of Hormuz: A Critical Chokepoint

The Strait of Hormuz, connecting the Persian Gulf with the Gulf of Oman and the Arabian Sea, is one of the world’s most strategically essential oil shipping lanes. Approximately 20% of the world’s oil and liquefied natural gas (LNG) passes through this narrow corridor, making it a crucial artery for global energy supplies. The BBC reports that in 2025, roughly 20 million barrels of oil and oil products transited the strait daily, equating to around $600 billion worth of energy trade annually.

Since the start of the conflict on February 28th, with strikes launched by the U.S. And Israel against Iran, the passage through the Strait has been severely restricted. Time Magazine notes that at least 15 tankers have been targeted in the region, causing widespread disruption to oil and LNG trade and contributing to surging prices.

Impact on Key Asian Nations

Japan

Japan is particularly vulnerable, relying on the Strait of Hormuz for approximately 93% of its oil imports. The Associated Press reports that gasoline prices in Japan have already risen to about 175 yen ($1.09) per liter on March 19, 2026, up from around 144 yen ($0.91) a month prior. The country has released oil stockpiles – 15 days from the private sector and a month’s worth from national reserves – but concerns remain about a potential repeat of the oil shocks of the 1970s. Calls for accelerating the adoption of renewable energy sources are growing.

South Korea

South Korea imports about 70% of its oil and 20% of its LNG from the Middle East. Rising oil prices have led to queues at cheaper gas stations, impacting delivery workers, truckers, and greenhouse farmers. Officials estimate current reserves could last around seven months. The government is responding by lifting the cap on coal-fired power generation, planning to increase nuclear output, and considering resuming imports of Russian crude oil and naphtha.

China

Despite being the largest importer of shipments through the strait, China appears relatively insulated due to substantial strategic reserves of oil and gas, and a growing share of renewable energy, which now accounts for about 30% of its power mix. However, Chinese consumers are experiencing higher travel and fuel costs, with airlines increasing fares on international routes.

Vietnam

Vietnam’s export-driven industrial sector is facing increased production costs due to higher fuel and freight expenses. Manufacturers in steel, textiles, and footwear are experiencing rising input prices, and retailers report suppliers are increasing prices or pausing deliveries. Rising diesel prices are also impacting transportation and agriculture. Authorities have warned of potential jet fuel shortages in April, urging airlines to review flight schedules.

Thailand

More than half of Thailand’s electricity is generated by LNG, around 40% of which is imported from the Middle East. The country has suspended petroleum exports, increased coal and hydropower generation, and directed government offices to conserve energy. Experts warn that energy prices will likely rise as the national subsidy budget is depleted.

Indonesia

Indonesia has so far avoided raising energy prices, but this relief may be temporary, potentially ending after the Eid al-Fitr holiday. Analysts anticipate Indonesia will soon face a difficult decision: continue costly subsidies or scale them back to stay within budget, risking inflation.

The Philippines

The Philippines has implemented cash assistance of 5,000 pesos ($83) for approximately 139,000 tricycle taxi drivers in Manila to assist offset surging fuel costs. The program is expanding nationwide to include other public transport drivers, and fuel subsidies are being extended to fishermen and farmers. Government offices have shifted to a four-day function week to reduce energy consumption, and proposals to lower biofuel prices are under review.

Pakistan

Pakistan has ordered schools to close for two weeks and cut free fuel allocations for government vehicles by 50% for two months. Officials are exploring alternative oil supply routes, including imports from Saudi Arabia, and receiving shipments through the Red Sea port of Yanbu. The Pakistan Day parade was canceled, replaced with a flag-hoisting ceremony to conserve energy.

India

India has increased domestic production of cooking gas and prioritized distribution to households. This has tightened supplies for commercial users like hotels and restaurants. Nearly half of India’s crude oil and LNG imports pass through the Strait of Hormuz. Two Indian-flagged LPG vessels have crossed the strait since the conflict began, providing some relief.

Nepal

Nepal’s sole petroleum distributor, the state-run Nepal Oil Corporation, has begun rationing cooking gas by filling cylinders only to half capacity to stretch supplies. Gasoline prices have increased by about 10%, and authorities are urging households to switch to induction cookers.

Looking Ahead

The situation remains fluid and highly dependent on the duration and intensity of the conflict involving Iran. Continued disruption to the Strait of Hormuz will likely exacerbate energy price volatility and necessitate further conservation measures and diversification of energy sources across Asia.