On March 2, 2026, a commercial ship anchors off the coast of the United Arab Emirates due to a navigational disruption in the Strait of Hormuz in Dubai.
Anadolu | Getty Images
Iran’s closure of the Strait of Hormuz has sent shockwaves through global energy markets, with Asia expected to face the greatest pain.
A senior Iranian Revolutionary Guards commander said on Monday that the Strait of Hormuz had been closed and warned that ships attempting to pass through the waterway would be targeted, according to Iranian media.
This strait, located between Oman and Iran, serves as an important artery for global oil trade. According to energy consulting firm Kpler, about 13 million barrels per day will pass through it in 2025, accounting for about 31% of all offshore oil flows.
A prolonged closure of the strait is likely to lead to even higher oil prices, with some analysts predicting oil prices could exceed $100 per barrel. global benchmark brent Prices last rose 2.6% to around $80 a barrel, and have risen almost 10% since the conflict broke out.
Kupler said about 20% of the world’s liquefied natural gas exports from the Persian Gulf, primarily from Qatar and shipped via the Strait of Hormuz, are also at risk. Qatar, one of the world’s biggest LNG suppliers, suspended production on Monday after Iranian drones hit facilities in Ras Laffan and Mesaieed Industrial City.
“In Asia, Thailand, India, South Korea and the Philippines are most vulnerable to oil price increases due to their high import dependence, while Malaysia will be a relative beneficiary as it is an energy exporter,” Nomura wrote in a note on Monday.
Here’s how companies that rely on Gulf energy and shipping through the Strait of Hormuz will be affected.
South Asia: Immediate physical burden
Analysts said South Asia would face the most severe disruptions, especially regarding LNG supplies.
According to Kpler data, Qatar and the United Arab Emirates account for 99% of Pakistan’s LNG imports, Bangladesh’s 72% and India’s 53%.
Pakistan and Bangladesh are particularly vulnerable due to limited flexibility in storage and procurement. For example, Bangladesh already has a severe structural gas shortage. The country has an energy deficit of more than 1.3 billion cubic feet per day, according to the Institute for Energy Economics and Financial Analysis.
“Pakistan and Bangladesh have limited flexibility in storage and procurement, meaning disruption is likely to result in rapid power sector demand destruction rather than aggressive spot bidding,” Katayama said.
India faces the largest combined exposure in the region. “More than half of the company’s LNG imports are Gulf-related and a significant portion is linked to the Brent index, so the Hormuz oil price hike will simultaneously increase oil import costs and LNG contract prices. It will cause a double physical and economic shock,” he said.
Similarly, about 60% of India’s oil imports come from the Middle East, according to UBP. A continuation of the blockade will therefore amplify both energy import costs and current account pressures.
China: large exposure but sufficient buffer
Closing Hormuz Island will test China’s energy security, but stockpiles and alternative supplies will provide some cushion.
The country is the world’s largest oil importer, buying more than 80% of Iranian crude oil, according to Kupler.
According to UBP estimates, about 30% of the company’s LNG imports come from Qatar and the UAE, and about 40% of its oil imports pass through Hormuz.
“China is effectively exposed, but more flexible,” Kpler’s Katayama said.
According to Kpler, China’s LNG inventories stood at 7.6 million tons as of the end of February, providing short-term cover. But if the power outage lasts longer, China will have to compete for cargo in the Atlantic Ocean and the Pacific Basin will become strained, Katayama added. In that case, even if the Chinese government avoids a complete shortage, this dynamic could intensify price competition across Asia.
Saudi Arabia has increased oil loading in recent weeks, and strategic oil reserves held by major consuming countries such as China could provide a temporary buffer to the market, Rystad Energy said in a note on Sunday.
UBP said that although China is a major net energy importer in the region, it is not necessarily the most vulnerable to potential supply shocks.
Japan and Korea
According to UBP, the Middle East supplies 75% of Japan’s oil imports and about 70% of South Korea’s oil imports.
For LNG, Gulf exposure is lower than South Asia. According to Kpler estimates, South Korea procures 14% of its LNG from Qatar and the UAE, while Japan procures 6%.
Even without a complete shortage, the price impact could be severe. “Economies that are highly dependent on energy imports, such as Japan, South Korea and Taiwan, are more susceptible to supply shocks,” said Shire Lee Lim, lead macro and currency strategist for Asia Pacific at payments platform Convera.
Stock is limited. According to Kpler, South Korea has reserves of about 3.5 million tons of LNG, and Japan has reserves of about 4.4 million tons, enough to last about two to four weeks of stable demand.
South Korea’s net oil imports account for 2.7% of its gross domestic product, and Nomura lists it as one of the countries with the weakest current account balance.
Southeast Asia
In many parts of Southeast Asia, the initial blow is not immediate shortages but rising costs, industry experts say.
Kpler’s Katayama said spot-dependent LNG buyers would face significant increases in replacement costs as Asia competes with Europe for transatlantic cargo.
In Thailand in particular, the fall in oil prices is noticeable under Nomura’s framework, as the external impact is large and immediate. Thailand is Asia’s largest net importer of oil at 4.7% of GDP, and for every 10% rise in oil prices, the current account balance worsens by about 0.5 percentage points of GDP.
