Strait of Hormuz Closure: Asia Feels the Impact of Iran Conflict & Rising Oil Prices
Strait of Hormuz Closure Disrupts Global Energy Markets, Sparks Economic Strain Across Asia
The Philippines declared a national emergency on Tuesday as the effective closure of the Strait of Hormuz, following the start of the US-Israeli war with Iran in late February, sent shockwaves through Asian economies. The vital waterway – through which approximately 20% of the world’s oil passes – remains largely blocked, causing soaring oil prices and widespread economic disruption.
Traffic through the Strait has plummeted by 95 percent since the conflict began, according to Lloyd’s List, with major repercussions for global energy markets. While Iran has signaled a willingness to allow some ships through, approving them on a case-by-case basis, a new vetting and registration system is reportedly under development by the Islamic Revolutionary Guard Corps (IRGC) to implement a “selective” blockade.
The impact is being acutely felt across Asia, which relies heavily on Middle Eastern oil and gas. Governments are scrambling to mitigate the effects, implementing measures ranging from work-from-home orders to national holidays and early university closures in an effort to conserve dwindling supplies. Even China, which reportedly holds reserves equivalent to three months of imports, is limiting fuel price hikes, despite a 20% jump in costs for consumers.
In the Philippines, jeepney drivers are among the hardest hit. Carlos Bragal Jr. Has seen his daily earnings drop from 1,000 to 1,200 pesos ($16.60 to $19.92) for a 12-hour shift to as little as 200 to 500 pesos. “I have sent my daughters to school because of this job,” Bragal said. “We had a good life. But now, we do not know what will happen to us in the next few weeks.” He added that government fuel subsidies are insufficient, covering only two days of driving.
Thailand has taken a different approach, with public broadcaster Thai PBS urging news anchors to remove their jackets on air as a symbolic gesture to conserve energy. The government has also ordered agencies to work from home and is encouraging citizens to keep air conditioning temperatures at 26-27C.
Sri Lanka, still recovering from a severe economic crisis in 2022, is facing renewed hardship. The country has implemented an alternate-day policy for private vehicles and is grappling with long queues at petrol stations. Nimal, a lawnmower operator in Colombo, expressed concern about lost income, while Bhumi Kumar, a factory worker, worried about the indefinite continuation of the shutdown.
In Myanmar, already struggling with civil war since May 2021, authorities have imposed similar restrictions on vehicle use. Ko Htet, a bank employee, noted the impact on social life, with friends now coordinating gatherings around fuel availability. He also voiced fears of a potential black market for fuel.
India, which imports roughly 60% of its liquefied petroleum gas (LPG) through the Strait of Hormuz, is also experiencing significant disruption. The ceramics industry in Gujarat has largely shut down, leaving 400,000 workers in limbo. Sachin Parashar, a migrant worker, said, “I will have to go hungry if I continue staying here without work.” Restaurants across the country are also struggling, with some forced to close or remove items from their menus due to gas shortages. Manpreet Singh, of the National Restaurant Association of India, stated that the situation is “dire” and cooking gas is simply unavailable.
As of Tuesday, the Pentagon is expected to deploy 3,000 airborne soldiers to the Middle East, potentially including a move to seize Iran’s main oil export hub, Kharg Island. President Trump claimed that talks with Tehran were “productive,” but Iranian officials have rejected this assertion. Meanwhile, Iran continues to threaten attacks on Israel and Gulf states and has at least a dozen mines deployed in the Strait of Hormuz, according to U.S. Intelligence assessments.