Asian Economies Implement Emergency Measures Amid Hormuz Energy Shocks

Asian economies are facing a second wave of energy shocks following the closure of the Strait of Hormuz due to the Iran war. Brent crude prices have surged to approximately $120 a barrel, far exceeding the $70 average used in government budgets, leading to the depletion of energy stockpiles and fuel subsidies.

The United Nations Development Programme estimates the conflict could cause $299 billion in economic losses across the Asia-Pacific region and push 8.8 million people into poverty. In response, regional governments have adopted emergency measures. India has prioritized household gas supplies for 330 million people over fertilizer production, while Prime Minister Narendra Modi urged citizens to reduce travel and farmers to halve fertilizer use.

Other Southeast Asian nations have shifted domestic policies to manage shortages. The Philippines introduced a four-day workweek in some public sectors and rolled out targeted subsidies. Thailand abandoned its diesel price cap after subsidy funds were exhausted, and Vietnam extended fuel tax suspensions to mitigate jet fuel shortages affecting tourism. Pakistan and Bangladesh are facing increased pressure on foreign exchange reserves due to volatile market prices. Experts warn that recovery will remain slow even after the conflict ends due to the time required to repair infrastructure and restart production.