As the war with Iran drags on, energy-starved countries in Asia, including close U.S. allies, are resorting to increasingly radical measures to keep their economies afloat.
On Tuesday, the Philippines became the first country to declare a national energy emergency. Koreans are advised to take shorter showers and charge their mobile phones during the day to save energy. Meanwhile, Japan this week began releasing its largest emergency oil stockpile in history, telling its people there was no need to hoard toilet paper amid mounting panic over potential shortages of consumer goods.
The escalating unrest is a grim sign of what is to come for the rest of the world, as the Iran war shuts down a vital source of oil and natural gas. Asian countries rely heavily on imports from the Middle East, which accounts for about 60% of the region’s oil supply.
After the United States and Israel attacked Iran last month, Iran effectively closed off the Strait of Hormuz, the only sea connecting the Persian Gulf and the Indian Ocean, restricting a fifth of the world’s energy supplies.
Energy research firm Wood Mackenzie has predicted that Brent oil prices could rise to $150 a barrel in the coming months if the war continues, warning that an average price of $125 a barrel this year could trigger a global recession.
Analysts said last week that “prices across the oil and products complex will rise due to the geopolitical impasse, prolonged war, and declining inventories outside the Gulf.”
While President Trump has touted optimism that the war could soon end, analysts predict that even if a ceasefire goes into effect, economic pain will continue for months, if not years.
The conflict, now in its fourth week, is straining each country’s usual stockpiles of supplies. Soaring fuel prices have caused airlines in Asia, including Vietnam, the Philippines, Australia and the Pacific, to suspend or reduce operations.
As many countries scramble to secure more raw materials from global markets, the threat of depletion has raised concerns about how shortages will trickle down to Asia’s manufacturing industries and ultimately increase scarcity in products such as electronics, cars and textiles.
Some countries, including China, have restricted overseas shipments of fuel and other materials to protect their own inventories.
South Korea is considering restricting exports of naphtha, a petroleum byproduct used to make plastics, said Yang Ki-wook, director of the country’s Commerce, Industry and Resources Security Bureau. Naphtha shortages are also prompting Japanese petrochemical companies to cut production.
Yang said the government is currently exploring other sources of naphtha, but a naphtha shortage could affect the production of large household appliances such as washing machines.
“We are preparing stronger measures if the situation persists,” the prime minister said on Tuesday.
Even if the war ends, production disruptions and destruction of energy infrastructure will continue to weigh on oil and gas supplies.
Last week, the International Energy Agency said the release of a historic 400 million barrels of oil stockpiles was not enough to solve the energy crisis and issued recommendations to curb demand, including avoiding air travel, switching to electric stoves and working from home.
Josh Kurlanczyk, senior fellow for Southeast Asia and South Asia at the Council on Foreign Relations, warned that even if governments try to cap fuel prices and reduce energy consumption, there are limits to their ability to alleviate economic pain.
“You can ask people to take precautions, like turn down their air conditioners, but you can’t pay for a few months’ worth of fuel,” he says.
But some countries have already turned to cash transfers to ease the immediate pain, with the Philippines subsidizing public transport operators and New Zealand announcing a weekly payment of NZ$50 (about $29) to low- and middle-income working households.
In a rice field on the outskirts of Thailand’s capital, Bangkok, farmer Theera Singh told CNN that if fuel uncertainty continues, he will reconsider planting another crop in May.
“We are the producers. Simply put, we are at the beginning of the chain, so the producers are the first to be hit,” he told CNN.
“Fuel is a key element. We can’t till and break up the soil by hand. We can’t harvest by hand with people anymore. We can’t scoop water into the fields by hand anymore. We need machines for everything.”
Kocha Olarn and Laura Sharman contributed reporting
