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The Hindu
Asia braces for second wave of energy shocks from Iran war
The Iran war, which began with the closure of the Strait of Hormuz, has triggered a second wave of energy shocks across Asia. Initial defensive measures, such as power saving and use of stockpiles, are running out as the conflict shows no sign of ending. Fuel shortages are now rippling through economies, driving up airfare, shipping rates, and utility bills. The United Nations Development Program warns that 8.8 million people could be pushed into poverty and the Asia-Pacific region may face $299 billion in economic losses. Asian governments, which budgeted for oil at $70 per barrel, are now facing Brent crude prices around $120. They must choose between maintaining costly subsidies—straining public finances—or cutting them and passing costs to consumers, risking public backlash. Countries like the Philippines have adopted four-day work weeks and targeted subsidies, while Thailand ended its diesel price cap and Vietnam suspended fuel taxes. Cash-strapped nations like Pakistan and Bangladesh are forced to buy at volatile market prices, straining foreign exchange reserves. Experts warn that the situation will worsen, with Southeast Asia as the biggest pain point. The crisis underscores the fragility of Asia’s middle class and may reshape economies through shifts in job markets and energy planning. Longer-term solutions like diversifying suppliers and developing renewables are being debated, but the immediate outlook is grim.
MonitorConfidence: HighShort term horizonExecution risk: High
Published 11 May 2026, 07:36 UTC4 min read
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Summary
TL;DR
- The Strait of Hormuz remains closed due to the Iran war, cutting off a critical energy artery for Asia.
- Brent crude oil prices have risen to around $120 per barrel from a budgeted $70.
- Philippines shifts to a four-day work week and provides targeted subsidies to save fuel.
- Thailand abandons its diesel price cap less than a month into the conflict as subsidies run out.
- Vietnam suspends fuel taxes and faces jet fuel shortages leading to flight cuts.
- Pakistan and Bangladesh buy oil at higher market prices, straining foreign exchange reserves.
- UNDP estimates 8.8 million people may be pushed into poverty and $299 billion in economic losses for Asia-Pacific.