Closed schools. Work-from-home demands. Price caps.
Asia’s governments are scrambling to manage a fuel shortage caused by high oil prices and a closed Strait of Hormuz. Asia is particularly dependent on oil exports from the Middle East; Japan and South Korea respectively source 90% and 70% of their oil from the region.
The energy crunch is forcing governments to adopt more extreme measures to save fuel.
On March 10, Thailand ordered civil servants to take the stairs rather than the elevator, and to work-from-home for the duration of the crisis. It increased the air-conditioning temperature to 27 degrees Celsius, and will tell government employees to wear short-sleeved shirts over suits. (Thailand has about 95 days of energy reserves left, according to Reuters).
Vietnam also called on businesses to let people work-from-home to “reduce the need for travel and transportation.” The Philippines is pushing for a four-day work week, and has ordered officials to limit travel “to essential functions only.”
South Asia is getting hit hard too. Bangladesh brought forward the Eid-al-fitr holiday, allowing universities to close early in a bid to save fuel. Pakistan also instituted a four-day week for government offices and closed schools. India suspended shipments of liquefied petroleum gas to commercial operators to prioritize supplies for households, leading to worries from hotels and restaurants that they may be forced to close without fuel supplies.
Asian countries are also intervening more directly into fuel markets.
South Korean President Lee Jae Myung on Monday said the country would introduce a price cap on petroleum products, and warned that the current crisis presented a “significant burden on the country’s economy.” Around 1.7 million barrels of Korea-bound oil has been held back per day due to the ongoing conflict, presidential policy advisor Kim Yong-beom noted during a March 9 press briefing.
Ryosei Akazawa, Japan’s industry minister, didn’t rule out dipping into Japan’s national oil reserves on Wednesday, adding the country “will take all possible measures to ensure stable supplies of energy”.
On Monday, Indonesia’s finance minister said the Southeast Asian country would set aside 381.3 trillion rupiah ($22.6 billion) for energy subsidies and pay state energy firms like Pertamina to keep fuel and electricity prices affordable for its residents.
Thailand plans to freeze cooking gas prices until May, and encourage consumers to use alternative energy sources, like biodiesel and benzene. Vietnam is also considering scrapping its tariffs on fuel imports.
Oil prices have had a volatile few days. WTI crude prices surged to over $115 per barrel on Monday, only to swing back and forth as competing statements emerged from Washington. WTI Crude is now past $90 per barrel, as of Wednesday evening.
On March 11, the International Energy Agency’s 32 member countries unanimously agreed to release 400 million barrels of oil from their emergency reserves.
Flows from the Middle East are still constrained, with the Strait of Hormuz effectively closed to maritime traffic. “While oil reached $150/bbl [per barrel] in inflation-adjusted terms during the 2022 Russia/Ukraine crisis, this situation could prove more severe…supply volumes at risk this time are dimensionally bigger—and real,” wrote Wood Mackenzie analyst Simon Flowers in a research note. “In our view, $200/bbl is not outside the realms of possibility in 2026.”
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