Global Fuel Crisis Deepens as US-Israel War with Iran Escalates

Rising oil prices driven by the ongoing US-Israeli war with Iran are triggering a global fuel crisis, prompting governments worldwide to implement emergency measures to mitigate the economic impact and ensure fuel supplies. From fuel price hikes and rationing to supplementary budgets and shifts in fuel standards, nations are scrambling to respond to the escalating situation.

South Korea Prepares Economic Support

In South Korea, the government is preparing a supplementary budget of approximately 25 trillion won ($16.61 billion) to support citizens and businesses affected by the rising oil prices The New Arab. This financial aid will be funded through surplus tax revenues, avoiding the need for treasury bond issuance to minimize market disruption.

Philippines Adjusts Fuel Standards

The Philippines has temporarily authorized the apply of Euro-2 fuel for specific vehicles and sectors – those manufactured in 2015 or earlier, traditional buses, power plants, generators, and the maritime and shipping industries – to maintain fuel supply The New Arab. This move comes after protests from bus drivers over doubled diesel prices and follows the introduction of shorter workweeks and fuel subsidies. The government is also exploring fuel supply arrangements with India, China, Japan, South Korea, Thailand, and Brunei, and is set to import Russian oil for the first time in five years.

Malaysia Increases Fuel Subsidies

Malaysia has significantly increased its financial support for fuel subsidies, raising the allocation from around 700 million ringgit ($178 million) to 3.2 billion ringgit in less than a week The New Arab. Prime Minister Anwar Ibrahim emphasized the government’s commitment to protecting citizens and businesses amid the uncertainty, noting that the subsidies help keep fuel prices lower than market value. The disruptions in the Strait of Hormuz, a key oil transit route, are contributing to the price increases.

Pakistan Sees Surge in Airfares

In Pakistan, air ticket prices have risen sharply following the Eid al-Fitr holiday, driven by increased seasonal demand and higher fuel costs The New Arab. Domestic ticket prices have increased by 15% to 20%, with some travelers paying up to 30% more. This increase is attributed to both strong travel demand and a sharp rise in jet fuel prices, which have doubled in Europe and increased by nearly 80% in Asia since the start of the conflict in late February.

Sri Lanka Raises Fuel Prices and Implements Rationing

Sri Lanka has raised fuel prices by 25%, the second increase in two weeks, as the country prepares for a prolonged impact from the war in the Middle East Dawn. Regular petrol now costs 398 rupees ($1.30) per litre, up from 317 rupees, although diesel, commonly used for public transport, rose by 79 rupees to 382 rupees. The government has also introduced strict fuel rationing and ordered the closure of schools, universities, and government offices every Wednesday. Long queues continue to form at fuel stations across the country.

The Impact of the Strait of Hormuz

The closure of the Strait of Hormuz, through which approximately 20% of global oil exports pass, by Iran following the US and Israeli war is a major factor driving the fuel crisis Dawn. Sri Lanka, which imports all of its oil and coal, sources refined petroleum products from Singapore, Malaysia, and South Korea, and crude oil for its Iran-built refinery from the Middle East.

Broader Economic Concerns

The ongoing conflict in the Middle East poses a serious threat to Sri Lanka’s economic recovery from the 2022 meltdown Dawn. President Anura Kumara Dissanayake has ordered a four-day working week and encouraged operate-from-home arrangements to reduce fuel consumption.