This week, Sri Lankans took Wednesday off. They’ll be doing the same next week – and for as long as the Iran war continues to disrupt global oil supplies. The country’s president Anura Kumara Dissanayake announced a four-day week in order to preserve fuel. Around 90 per cent of all energy supplies that pass through the Strait of Hormuz are imported by Asian countries, which are bracing for the impact of the strait currently being choked by Tehran. Oil prices have crossed the $110 per barrel mark, surging by almost 40 per cent since the start of the conflict on 28 February.
Thailand has issued very specific guidelines asking that air conditioners are not set to less than 26 degrees
As well as closing down public institutions three days a week, Sri Lanka is also rationing fuel with motorists allotted 15 litres of petrol or diesel per week. Elsewhere in South Asia, India is facing its worst gas crisis in decades, despite being one of the few countries whose vessels were granted a safe passage from the Strait of Hormuz by Iran. The Indian government has increased the price of a standard 14.2 kg household LPG (Liquefied Petroleum Gas) cylinder by seven per cent, limiting LPG supplies for the industry to ensure continued supply at homes. Pakistan, which also had one of its tankers pass through Hormuz this week, announced a 20 per cent hike in petroleum prices. The country also imposed a four-day week and announced significant cuts in government officials’ fuel spending and salaries. Both Pakistan and Bangladesh have shut down educational institutes, allowing classes to be taken online. These Muslim-majority countries are preparing for a hike in fuel demand during this weekend’s Islamic holiday of Eid-ul-Fitr, which will see a spike in nationwide travel.
The timing of the policies suggest that they’re fearing a long-term fuel shortage owing to a potentially protracted war in Iran. Similar preparations have been undertaken in East and Southeast Asian countries.
Japan this week announced the release of 80 million barrels of oil, or 45 days of supply, out of its reserves. South Korea is releasing 22.46 million barrels of oil, after International Energy Agency (IEA) members decided to make 400 million barrels available from their reserves. These releases echo the austerity measures being undertaken elsewhere in the region.
The Philippines has introduced cash handouts for public transport drivers and mandated government staff to work from home at least once a week. Vietnam has discouraged the use of personal vehicles, encouraging public transportation or working from home.
Thailand has issued very specific guidelines asking that air conditioners are not set to less than 26 degrees; a dress-code of short-sleeved shirts also features in the the guidance aimed at limiting energy expenditure and saving fuel. Indonesia, meanwhile, is aiming to absorb the fuel shock by introducing subsidies, but rising crude prices, and the fluctuation of the Indonesian rupiah might make it difficult to sustain the allocations.
The uncertainty surrounding the war is compelling these countries to plan weeks and months in advance, fearing the worst. It also means that climate considerations are now firmly taking a backseat, as Asia seeks a return to coal amid soaring LNG prices.
Bangladesh and Pakistan have increased coal power generation to replace LNG. The Philippines, where coal was already responsible for over 60 per cent of the power supply prior to the war, is foreseeing an increase in that share. Last year, the IEA (International Energy Agency) had already forecast a 4.5 per cent rise in coal usage in Indonesia, Vietnam and the Philippines until 2030, with India also expected to see a 3.3 per cent hike this decade. The Iran war will further increase these numbers.
Despite the Ukraine war pushing US sanctions on Russian oil since 2022, Asian countries are now queueing up to purchase energy from Moscow, currently benefitting from a month-long waiver from Washington. Russia made £5 billion from fossil fuel sales in the first fortnight of the Iran war benefitting from both the escalating demand, and the mounting prices. From Bangladesh to Thailand, countries across Asia have opened talks to increase their imports from Russia in order to cope with the prolonged uncertainty surrounding the Strait of Hormuz supplies.
As the impact of fuel shortage snowballs, environmental concerns, or diplomatic rivalries, will play second fiddle to survivalist policies. The United States’ allies in Asia are already paying a heavy price for Donald Trump’s war.
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