Southeast Asia shuts offices, limits travel as oil crisis deepens

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Taipei, Taiwan – Governments and businesses across Southeast Asia are scrambling to stave off energy shortages as the Strait of Hormuz remains shut to maritime traffic, amid the fallout of the United States-Israeli war on Iran.

Thousands of kilometres away from the Gulf, government offices in the Philippines have moved to a four-day work week, officials in Thailand and Vietnam have been encouraged to work from home and limit travel, and Myanmar’s government has imposed alternating driving days.

Governments are also intervening directly in the market in an effort to stabilise fuel prices.

Thai Prime Minister Anutin Charnvirakul announced a temporary price cap on diesel, while Vietnam said it had started tapping into its fuel price stabilisation fund, according to state media.

The measures are just a preview of what is to come in the region if the Strait remains closed, according to Priyanka Kishore, director and principal economist at Asia Decoded in Singapore.

“They’re trying to manage the supply situation before it even comes close to hitting them,” Kishore told Al Jazeera.

Despite holding substantial amounts of fossil fuels, Southeast Asia relies heavily on imported oil and gas, much of which passes through the Strait of Hormuz.

About 84 percent of the crude oil and 83 percent of the liquefied natural gas (LNG) that passed through the Strait in 2024 was bound for Asia, according to data from the US Energy Information Administration.

China, India, Japan, and South Korea accounted for nearly 70 percent of oil shipments, with about 15 percent bound for the rest of Asia, according to the agency.

The Philippines, Thailand, Malaysia and Brunei are among the economies most exposed to crude oil disruptions, according to Alloysius Joko Purwanto, an economist at the Economic Research Institute for ASEAN and East Asia (ERIA) in Jakarta.

The four nations rely on imports for 60-95 percent of their crude supply, he said, citing data from the Joint Organizations Data Initiative.

Even oil-producing Indonesia relies on imports for more than one-third of its crude, he said.

The supply chain shock has drawn attention to the region’s limited energy reserves, which face growing strain every day the waterway remains closed.

Vietnam has announced plans to procure about 4 million barrels of crude oil from non-Middle Eastern countries.

Sam Reynolds, a researcher at the US-based Institute for Energy Economics and Financial Analysis, said that would be equivalent to just six days of consumption for the country,

Based on state media reports that the country has reserves for 20 days, the country is at a “high risk of fuel shortages without more crude inflows”, Reynolds said.

Indonesia, Southeast Asia’s largest economy, maintains a fuel reserve of about 21-23 days, according to local media.

Thai Energy Minister Auttapol Rerkpiboon said last week that the country had reserves for 65 days, which the government would seek to supplement with supplies for an additional 30 days.

The Philippines holds reserves for 50-60 days, but in privately owned commercial inventories, leaving Manila to rely on “excise tax cuts for petroleum products, additional imports by the Philippines National Oil Company, and ad hoc appeals to private companies for releases”, Reynolds said, referring to the state-run oil company.

“All countries are scrambling to replace disrupted supplies, but short-term alternatives are limited by refinery configurations and operational risks of using different crude grades, as well as shipping distances and costs,” Reynolds told Al Jazeera.

Southeast Asian countries’ emergency stockpiles pale in comparison with those of their peers in northeast Asia.

Japan holds reserves for 254 days, while South Korea and China have stockpiles to last about 208 and 120 days, respectively.

Replacing dwindling crude oil supplies is just part of the challenge.

Economies must also supplement petroleum products that come from refining crude oil, such as gasoline, diesel, jet fuel, and petrochemicals.

Laos, Cambodia and Myanmar either lack or have limited oil refining capacity, forcing them to rely on exported products from neighbouring Thailand, Vietnam and Singapore, ERIA’s Joko said.

They will be under added stress as Asia’s oil refineries slow down and restrictions are placed on petroleum exports to conserve domestic oil supply, he said.

Thailand has already moved to ban oil exports, except to Cambodia and Laos. China, another major regional supplier, has also ordered state-owned companies to suspend fuel exports.

Amid the supply chain disruptions, petrochemical companies, including Singapore’s Aster Chemicals and Energy and Indonesia’s PT Chandra Asri Pacific, have started declaring force majeure, indicating that they may not be able to fulfil their contractual obligations.

On Tuesday, Thai petrochemicals firm Rayong Olefins, ‌a unit of Siam Cement Group, said it was suspending plant operations because it could not obtain key raw materials, such as naphtha and propane, amid the closure of the Strait of Hormuz.

If disruptions persist, the region is likely to see higher prices and more restrictions placed on oil and gas use.

The Economist Intelligence Unit said in a research note on Wednesday that it expected global oil prices to average about US$80 per barrel in 2026, which, alongside elevated natural gas prices, “will raise inflation and lower growth across much of Asia”.

Kishore from Asia Decoded said the region could be looking at the prospect of a recession if the situation did not improve in the coming weeks.

“In three weeks, or maybe even in two weeks, we will be hearing a lot more about it,” she said.

“I think that is going to be a big question if we’re still not seeing anything going through Hormuz.”