Live updates: Oil surges to new wartime high as Trump mulls extended blockade of Iranian ports
As the White House lays the ground work for an extended blockade of Iranian ports, Asian nations will be bracing for further fallout.
The price of oil is surging again after US President Donald Trump said he will maintain the naval blockade on Iran’s ports and vessels unless Iran agrees to curb its nuclear program.
Asian nations, which are heavily reliant on energy exports through the Strait of Hormuz, have borne the brunt of the economic pain from the war that has stretched into its 9th week. Everything is in short supply, from crude and natural gas to plastics and fertilizers.
Brent crude is now trading at $123 a barrel. On Thursday, oil prices surged with Brent crude up more than 12%, hitting $126 at one point. Before the war, 80% of the crude oil and gas that flowed through the Strait of Hormuz headed to Asia.
With the price of jet fuel more than doubling, regional carriers are under pressure and scrambling to cope. Carriers including Qantas, Air New Zealand, Vietnam Airlines and AirAsia have already cut flights.
Asia, also home to major copper and nickel producers, has been hit by a shortage of sulfur – a key Gulf energy by-product that’s been effectively trapped by the conflict. Indonesia, the world’s largest nickel producer, is now trimming output.
To safeguard its major energy-consuming industries and consumers, South Korea is diversifying energy supply away from the Strait of Hormuz and increasing imports from the US, Algeria, Oman and elsewhere.
China has been able to weather the Iran energy shock better than its Asian neighbors thanks to its vast strategic reserves, embrace of coal, and diversified power grid. But the economic giant is vulnerable to surging prices and slowing demand for its exports as a result of the ongoing conflict.
Rising fuel costs have affected the lives and livelihoods of scores of people across the region from farmers in Thailand to drivers in the Philippines. As disruptions linger, the human suffering across Asia will deepen.
According to a UN report released earlier this month, around 8.8 million people in the Asia-Pacific region are at risk of falling into poverty because of the war.
