Asia faces an energy shock from the Iran war and a closed Strait of Hormuz, as governments halt exports and draw down stockpiles

“Asian countries are particularly reliant on oil and gas from the Gulf region,” Sung Jinseok, a researcher at the National University of Singapore’s Energy Studies Institute, told Fortune. The region is the world’s fastest‑growing importer of oil, while production remains low due to depleting fields and limited new discoveries.

Around 19 million barrels of oil, or 20% of the global oil trade, passes through the Strait of Hormuz each day. On average, exports from the Gulf constitute 80% to 90% of oil brought into Japan, and 30% to 40% of oil imported into China.

Asian governments are quickly moving to manage their fuel stockpiles. Thailand suspended its crude and petroleum exports on March 1; China ordered its largest oil refineries to halt diesel and petrol exports on March 5. Asian energy firms are curbing exports as well: Mangalore Refinery and Petrochemicals also curbed fuel exports yesterday.

Japan and South Korea, both major customers of Middle Eastern gas and oil, have also stressed that they have enough fuel stockpiled to handle demand, at least in the short term.

According to Sung, although countries like China have diversified their energy supply to include imports from Russia and Central Asia, and have significant domestic oil and gas production, “the level of dependency on exports from the Gulf remains high”.

The Strait of Hormuz, which sits at the entrance to the Persian Gulf, is also a key artery for liquified natural gas (LNG), with one fifth of global LNG volumes passing through its waters, according to a 2025 report by the U.S. Energy Information Administration (EIA). Of the LNG moved out of the Gulf, 83% was exported to Asian markets, with China, India and South Korea among the top destinations.

In Southeast Asia, Singapore and Thailand are the two largest importers of Middle Eastern gas. In 2025, Qatar supplied 45% of Singapore’s LNG, and 28% of Thailand’s.

Price surge

On Monday, a senior commander from Iran’s Revolutionary Guard announced the closure of the Straits of Hormuz, adding that the country will fire on any ship that tries to pass. The move followed U.S. and Israel strikes on Iran that killed its leader, Ayatollah Ali Khamenei.

At least eight container ships have been struck since the war began, with one vessel being damaged badly enough to force the crew to abandon ship.

“Most owners and shippers are playing it safe,” Capt. Raja Subramaniam, CEO of Fleet Management Limited, tells Fortune. “They are delaying sailings, shifting schedules, or routing vessels through safer waters. Some are calling at ports farther from the conflict zone to reduce exposure.” While the Strait of Hormuz presents the highest-risk to shippers, he adds that other areas, such as the Red Sea and the Gulf of Aden on the western side of the Arabian Peninsula, also have “elevated risk”. Even safer waters, like the Suez Canal, may see less traffic as shippers pick longer routes that evade high-risk areas entirely. 

Maritime insurers have also cancelled policies for ships traveling the Gulf, pushing many shipping lines to suspend traffic through the region. On March 4, global shipping giant Maersk said it would suspend cargo bookings in and out of Middle Eastern ports including those in the UAE, Iraq, Qatar and Bahrain, and some parts of Saudi Arabia and Oman, with the exception of ships carrying “foodstuff, medicine and other essential goods”.

“It’s a real risk sending ships through,” Tim Huxley, a director of Mandarin Shipping, a Hong Kong-based shipping investment company, told Fortune. “In total, there’s now over 3,000 ships stuck inside the Gulf, and that’s about 6% of the global oil tanker fleet.”

In response, global oil and LNG prices have surged. On March 5, Brent crude was trading at $83.80 per barrel, up almost 3% from the previous day. U.S. West Texas Intermediate crude rose 3.4% to $77.15 per barrel. And after Qatar shuttered production at the world’s largest LNG facility, Asia’s LNG prices soared to its highest level since 2023, Bloomberg reported. 

Singapore jet fuel prices surged by around 70% on Wednesday, hitting a record high of $70 a barrel.

The price of chartering a tanker has also skyrocketed. “A large tanker now costs around $436,000 per day,” Huxley says. “It’s very rarely been over $100,000 for the last few years, so this is a really significant increase.” 

Diversions, too, can be pricey. Shipping rates at the Saudi Arabian port of Yanbu, which sits on the country’s western coast, have already doubled, according to Reuters.

“Costs are rising, especially war-risk premiums and fuel from longer voyages. A diversion around the Cape of Good Hope can add more than a million dollars to a single trip,” Subramanian, of Fleet Management, explains. “Cargoes with tight delivery windows—especially energy shipments—feel the impact first.”

What alternatives are there?

For now, Asian economies can rely on their reserves, says Sung, who notes that Japan and South Korea have substantial oil stockpiles that can last over 200 days. China, too, has stockpiles amounting to three to four months of oil imports, while India’s supply can sustain the country for about two months. 

But if the Strait of Hormuz remains closed, energy shortages are likely to hike prices across Asian energy importers. 

Asian countries have tried to diversify their sources of energy, turning to fossil fuel providers outside of the Middle East, including the U.S. They’ve also tried to increase their own domestic energy production, including in renewable energy, as well as making tentative moves towards setting up intra-regional trade in electricity.

Huxley suggests a different solution in the short term, arguing that navies need to work together with shipping companies to provide protection. He points to Operation Earnest Will, the 1987-1988 campaign by the U.S., the U.K. and other allied nations to protect tankers in the Gulf during the Iran-Iraq War, as an example. “Weapons are more sophisticated now, but the escort system is still a possibility,” Huxley concludes.

The U.S. has currently pledged to tap the U.S. International Development Finance Corporation to provide insurance for any ship traveling in the Persian Gulf, and will offer protection from the U.S. Navy—though specific details on how this would work have yet to emerge.