War with Iran chokes flows of oil and natural gas, highlighting energy
security risks for Asia
[March 05, 2026] By
ANTON L. DELGADO and ANIRUDDHA GHOSAL
BANGKOK (AP) — Global energy trade is in turmoil as war around the
Persian Gulf chokes off oil and natural gas shipments, causing prices to
soar.
Asia is the most exposed since it relies heavily on imported fuel, much
of it shipped through the Strait of Hormuz, the narrow passageway that
carries a fifth of global trade in crude oil and liquified natural gas,
or LNG.
About 13 million barrels of oil per day moved through the corridor in
2025, according to energy consultancy Kpler. That's about a third of all
seaborne crude, the unrefined petroleum that is processed into fuels
such as gasoline and diesel.
Roughly a fifth of the world's LNG, natural gas cooled into liquid form
for easier storage and transport, also flows through the straits. More
than 80% of the LNG shipped through the strait in 2024 went to Asia,
according to the U.S. Energy Information Administration.
Since the Iran war began, the price of Brent crude, the international
standard, has jumped 15% to about $84 per barrel, the highest level
since July 2024.
U.S. President Donald Trump said Tuesday the U.S. will offer risk
insurance to shippers and may deploy its navy to protect vessels if
needed. But the disruptions are cascading beyond the region. When supply
tightens, richer nations outbid poorer ones for scarce cargoes, leaving
more vulnerable economies short of fuel. This was seen during past
energy shocks caused by Russia's invasion of Ukraine in 2022.
“The crisis, with the closure of the Hormuz Strait as the latest
development, would not only raise oil and gas prices but also grind
global economic activity to a halt," said Zulfikar Yurnaidi, with the
Association of Southeast Asian Nations ’ Centre for Energy.
China and India potentially face big risks
For Asia’s two most populous countries, their huge scale magnifies
the risks.
China is the world’s largest crude oil importer and India comes in
third. Sustained spikes in oil prices would ripple through their broader
economies, straining transport, industry and households.
China is the biggest buyer of Iranian oil, but Beijing has prioritized
energy security and has alternatives, including major use of renewables.
It imported about 1.4 million barrels per day from Iran last year,
roughly 13% of its total seaborne crude imports, according to Kpler.
Most of those shipments are already at sea and will cover another four
to five months of demand, Kpler estimates. China also has substantial
strategic petroleum reserves, though the exact amount is a state secret.
It can buy more from Russia: China’s independent refiners – also known
in the industry as ‘teapots’ – have been the key buyers for Iranian,
Russian and Venezuelan oil, often at big discounts due to risks
associated with Western sanctions. Despite war-related disruptions,
global supplies are sufficient overall.
“It is therefore unlikely that China would struggle to source enough
crude to power its economy or meet domestic demand,” said Muyu Xu, a
senior crude oil analyst at Kpler. “The real question is at what price.”
India might resume purchases of Russian crude oil, despite pressure from
Trump not to.
It has enough crude reserves to last less than a month. The next two
weeks will be critical and the situation could could deteriorate
quickly, driving up fuel costs and broader inflation if the conflict
drags on, according to energy analyst Vibhuti Garg with the Institute
for Energy Economics and Financial Analysis, or IEEFA, in Delhi.
“It is a very, very volatile situation,” Garg said.
The main risk is higher prices for perishable foods vulnerable to supply
shocks. At the same time, a weaker rupee and higher borrowing costs
could slow the economy, she said.
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An employee fills up the fuel tank of a car at a gas station in
Jakarta, Indonesia, Tuesday, March 3, 2026. (AP Photo/Achmad
Ibrahim)
 Japan, South Korea and Taiwan are
most exposed
Few regions are as exposed to Middle East energy flow disruptions as
East Asia.
Japan imported 2.34 million barrels of crude per day in January,
about 95% of its total imports that month, according to its Ministry
of Economy, Trade and Industry. Japan is often ranked as the world's
second-largest LNG importer.
South Korea relies nearly entirely on energy imports. The Korea
International Trade Association says it gets around 70% of its crude
oil and 20% of its LNG from the Middle East.
Taiwan also imports nearly all of its LNG. It has been trying to
reduce its reliance on the Middle East but still sources about
one-third from Qatar, which halted LNG production after attacks on
its facilities.
Japan and South Korea have large energy supply stockpiles. While
Taiwan announced that it has enough supplies for March and
contingency plans for the future.
But analysts say reserves are temporary buffers and energy-intensive
industries, like Taiwan's semiconductor industry, remain vulnerable.
Governments are in “hope for the best, prepare for the worst” mode,
said Grant Hauber, with IEEFA, warning some may regret not
diversifying sooner into renewables, a "natural hedge" against
disruption.
Fossil fuels dominate the energy mix in all three East Asian
economies. Renewables provide under 10% of power in South Korea and
Taiwan and about 22% in Japan, according to the International Energy
Agency.
Southeast Asia braces for energy issues
Developing, energy-hungry countries in Southeast Asia face the risk
of being outbid by richer nations as supplies tighten.
In Singapore, officials have warned businesses and households to
brace for higher energy bills.
In Manila, authorities banned non-essential travel and personal use
of government cars to cut fuel use.
In Thailand, officials have urged the public to save energy, as
motorists lined up at filling stations as prices climbed.
Full-time delivery riders and drivers — essential to keeping goods
and people moving through Thailand’s congested urban centers —
depend on fuel to earn a living. In the northern city of Chiang Rai,
64-year-old taxi driver Sommit Sutar said he can't see how to
conserve fuel and still work.
“Gasoline was already expensive. This war will make the problem even
worse,” Sutar said.
The government has suspended petroleum exports to shore up domestic
reserves, which it says can last up to 61 days while ramping up
natural gas production from the Gulf of Thailand and Myanmar.
Thailand relies heavily on spot-market LNG, leaving it “highly
exposed to price and geopolitical volatility,” said Amy Kong, with
the Brussels-registered research group Zero Carbon Analytics. That
makes it vulnerable to bidding wars with wealthier nations.
___
Ghosal reported from Hanoi, Vietnam. Associated Press business
writer Chan Ho-him in Hong Kong contributed to this report.
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