Asia Faces Energy Shock After Iran Closes Strait

Asian economies are facing a serious energy crisis after Iran closed the Strait of Hormuz and warned that it would fire on any ship attempting to pass through the route.

The move comes after US President Donald Trump joined hands with Israel to launch open-ended strikes against Iran. The stated aim of the campaign is to topple Iran’s long-ruling Islamist government. Counter-attacks have already begun, and Trump has indicated that the conflict could continue for weeks.

Oil Supply Under Threat

The Strait of Hormuz is one of the world’s most important oil corridors. Nearly one-fifth of global oil supplies pass through this narrow waterway, with much of it heading toward Asia.

After the weekend strikes, oil prices quickly reacted. Crude prices jumped from around $70 per barrel to nearly $80 before easing slightly. Shipping traffic through the strait slowed as tankers began rerouting, and insurance costs increased sharply.

A prolonged closure or military blockade could severely disrupt global oil flows and push prices much higher. Although many countries have emergency oil reserves that can last for weeks or months, analysts warn that a long conflict would create serious economic pressure.

India’s Energy Dilemma

India is particularly exposed. It relies heavily on oil imports from the Middle East. Recently, India adjusted its sourcing strategy under a trade agreement with the United States, reducing purchases from Russia and increasing imports from the Gulf region.

With tensions rising in the Strait of Hormuz, India may face higher import costs and supply uncertainty, which could impact fuel prices and inflation at home.

China’s Growing Concern

China imports more than half of its seaborne crude oil from the Middle East. Around a quarter of that supply comes directly from Iran.

China currently has crude oil reserves that can last about 115 days. It also receives oil through pipelines from Russia and Kazakhstan, which are not affected by Middle East shipping routes. However, analysts warn that China does not have enough capacity to fully cushion a prolonged shock.

The energy risk comes at a difficult time for China’s economy, which is already facing slow growth, a property crisis, deflation pressures and high youth unemployment.

Japan and South Korea Highly Vulnerable

Japan and South Korea are even more dependent on Gulf energy supplies.

Japan imports over 90% of its oil through the Strait of Hormuz, while South Korea gets about 70% of its crude from the region. Both countries have strong reserves — Japan holds about 254 days of oil stockpiles, and South Korea has reserves for more than 210 days.

However, rising oil prices could still hurt their economies. Both nations already spend more than $100 billion each year on energy imports. Higher costs may worsen trade deficits and increase pressure on households. Japan is also dealing with ongoing inflation challenges.

Taiwan’s Semiconductor Risk

Taiwan imports over 96% of its energy needs. Much of its oil and gas arrives through the Strait of Hormuz.

Taiwan has about 120 days of oil reserves, but its natural gas supply can last only around 11 days. Any long-term disruption could threaten electricity supply and affect semiconductor production.

Taiwan manufactures most of the world’s advanced chips used in smartphones, electric vehicles and artificial intelligence systems. These factories require stable power, and backup generators can only handle short-term outages.

Global Economic Impact

The crisis also comes at a sensitive time for the United States. Business confidence had recently improved, and the global outlook was showing signs of recovery. However, rising geopolitical tensions and oil price volatility now pose fresh risks to global growth.

If the Strait of Hormuz remains closed for an extended period, Asia — and the wider global economy — could face a major energy shock with lasting economic consequences.