The 2026 U.S.-Iran War and the Global Energy Crisis

Chapter 17: Asia's Contraction

17.1 Thailand: Walk Up the Stairs, Set Air Conditioning to 27 Degrees, Wear Short-Sleeved Shirts

On March 6, 2026, Prime Minister Anuthin Charnvirakul's Prime Minister Order No. 2/2026 appeared in the Royal Thai Government Gazette. The document declared an immediate and complete ban on the export of gasoline, gasohol (ethanol-blended gasoline), diesel, aviation fuel, and liquefied petroleum gas (LPG). Only small amounts bound for Laos and Myanmar were permitted as exceptions. This was six days after the war began.

The legal basis for this order was the Fuel Emergency Decree, enacted in 1973. A law created fifty-three years earlier, during the first oil crisis. Under this decree, the prime minister could directly control the production, sales, transport, stockpiling, and import-export of all types of fuel. The regulation also extended to all electricity and energy consumption activities. The prime minister held authority to limit factory operating hours, reduce business hours for theaters and entertainment venues, restrict vehicle traffic, and control building electricity use and advertising illumination. A law dormant for over half a century had awakened and dusted itself off.

Thailand's swift response had reasons behind it. The nation's energy structure ranked among Asia's most vulnerable. Ninety percent of crude oil was imported, and half of that passed through the Strait of Hormuz. Over 55 percent of total electricity generation came from natural gas-fired power plants, but as production from the domestic Erawan gas field declined sharply, the shortfall depended on imported liquefied natural gas. According to S&P Global data, in 2025 Thailand imported approximately 491,500 barrels per day of crude oil and condensate from the Middle East. As of March 2, 2026, the Middle East's share of Thailand's crude oil imports exceeded 51 percent.

Based on Thailand's Energy Ministry assessment as of March 1, the nation's domestic petroleum reserves totaled 4.877 billion liters, equivalent to approximately 38 days of supply. Adding the 1.666 billion liters in transit through the Strait of Hormuz and 1.117 billion liters via alternative routes provided an additional 22 days of supply. Combined, this amounted to 60 days. Compared to Japan's 254 days and South Korea's 208 days, these figures were suffocating.

The government recognized that an export ban alone would prove insufficient. Energy conservation measures followed immediately. Public officials and government employees were ordered to work from home, and official business travel was prohibited. The Energy Ministry issued directives to government offices and large commercial facilities to set air conditioning temperatures no lower than 26 to 27 degrees Celsius. In a tropical country where temperatures hover around 35 degrees Celsius year-round, raising air conditioning four degrees carried meaning beyond mere numbers. For people working in Bangkok's high-rises, it meant spending eight hours a day drenched in sweat.

Dress code relaxations followed. Both government officials and private sector employees were advised to forgo neckties and formal jackets, favoring short-sleeved shirts and light clothing instead. Directives instructed people to use stairs rather than elevators for the first three floors to reduce electricity consumption. These were recommendations rather than legal mandates. However, when Energy Minister Auttapol Rerkpiboon personally ordered the energy emergency monitoring center into operation and instructed all relevant agencies to continuously assess market impacts, reserve levels, and price trends, the boundary between recommendation and command blurred.

Meanwhile, the Oil Fuel Fund rapidly depleted. This fund had served as a buffer through which successive Thai governments artificially suppressed domestic retail prices whenever international oil prices rose. By March 22, the fund's deficit reached 2.801 billion baht, approximately one trillion Korean won. As of March 24, the subsidy per liter of diesel fuel on expressways stood at 26.99 baht. The figure had risen 2.9 baht from the previous day. Daily outflows from the fund approached 2.59 billion baht, roughly 92 billion Korean won.

On March 15 and 16, the Energy Ministry conducted surveys at approximately 1,500 gas stations nationwide. The results proved grimmer than anticipated. Ten percent had suspended operations due to fuel shortages, and nearly 70 percent faced either complete depletion of specific fuel types or insufficient inventory. In Korat (Nakhon Ratchasima), a transportation hub in the northeast, long queues formed at every gas station. In Mae Sot district in Tak Province in the west, three-kilometer traffic jams were reported. Similar scenes unfolded in provincial cities like Suphan Buri and Nakhon Sawan.

On March 26, a special cabinet meeting convened. The Thai government approved seven emergency measures. These included review of consumer tax reductions, increasing welfare card limits for vulnerable populations (from 300 baht to 400 baht monthly), supporting the transportation industry, and expanding fertilizer subsidies for farmers. The same day, the government implemented a 6-baht per liter increase in fuel prices. Signs reading "600 baht or less" appeared at gas stations. Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas declared, "Fuel prices must reflect actual production costs." The logic was that distorting prices creates inefficiency throughout the entire economy and wastes public resources.

Lighting decreased by half at Thailand's iconic shopping malls, including ICONSIAM and CentralWorld, and escalator operations were minimized. In a country where tourism accounts for nearly 20 percent of GDP, darkened and heated shopping malls themselves constituted economic damage. In Chiang Mai, gas stations received only 10,000 liters of diesel per day, exhausting supplies within hours. At one gas station in Songkhla Province in the south, signs reading "Diesel Depleted" and "Temporary Pumping Halted" hung side by side.

Rayong Olefins, a petrochemical company and subsidiary of Siam Cement Group (SCG), announced in mid-March that it would suspend factory operations. The firm could not secure essential raw materials such as naphtha and propane due to the closure of the Strait of Hormuz. It was a force majeure declaration, official notification that contract performance had become impossible. This single document signaled the impending cascade shutdown of Thailand's petrochemical industry.

At an online forum titled "Thailand's Survival Strategy Amid Middle Eastern Conflict" hosted by Kasetsart University, macroeconomic specialist Wiparat Panpiemras from the Ministry of Finance's Fiscal Policy Bureau offered this diagnosis: the Middle East crisis was not simply raising energy prices but also driving up prices for metals, agricultural products, livestock, fertilizers, and petroleum byproducts like plastics. It was causing currency, stock, and bond fluctuations in global financial markets and creating disruptions in the global supply chain itself through shortages of production inputs.

One statement starkly revealed the structure of Thailand as a nation. Deputy Prime Minister and Energy Minister Phiphat Ratchakitprakarn admitted this fact during a live television interview: Thailand's petroleum transport trucks were equipped with GPS devices. The government had presented this as evidence of supply chain management. Yet that GPS had only measured the trucks' traveling speed. There had been no tracking of where the trucks were heading, which routes they took, or where final delivery occurred. Destination monitoring began only one day before this interview, weeks into the crisis. Daily reporting obligations regarding petroleum traders' inventory and movement routes were also introduced at that same time.

If the government could not track the final segment of the supply chain, it could not distinguish whether demand surges resulted from actual consumption, hoarding by end-users, or systematic diversion by intermediate distributors. Thailand's six refineries operated at full capacity throughout the crisis. Petroleum supply was not the problem. The problem was an institutional structure with a blind spot precisely at the point of highest pressure. And the minister himself confirmed this blind spot live on air.

Thailand was already straining to shake off the nickname "the Sick Man of Asia." The 2026 economic growth forecast stood at merely 2 percent. The energy crisis fell atop decelerating demand from China, global trade tensions, household debt at extreme levels, inequality, and political instability. A nation where exports comprise 70 percent of GDP and total trade volume exceeds 120 percent of GDP. A nation where tourism accounts for one-fifth of GDP. This was a structure destined to buckle first under rising fuel prices and global instability.

By late March, news arrived that Iran had permitted Thai-flagged vessels to pass through the Strait of Hormuz. Thailand joined China, Russia, India, Pakistan, and Malaysia on the list of nations permitted passage. However, the ability to pass through the strait and falling oil prices were separate matters. On March 24, Brent crude fell 5 percent or more to 98.28 dollars per barrel. This came shortly after reports that the United States had sent a ceasefire proposal to Iran. Analysts cautioned against optimism. Without genuine resolution of Middle Eastern conflict, supply risk would continue hovering above the market.

17.2 South Korea: Shorten Your Showers, Charge During Daylight, Ban Naphtha Exports

On Monday, March 3, 2026, Korean stock markets opened. The KOSPI plummeted 12 percent in a single day. It was the worst daily decline in history. Circuit breakers activated. The following Thursday brought a 10 percent rebound, followed by declines on Friday and Monday. Over four trading days, multiple trading halt mechanisms triggered in futures markets, and circuit breakers activated twice. The won-dollar exchange rate hit 1,506.37 won during March 3 trading, the weakest level since 2009.

Numbers spoke to South Korea's vulnerability. Energy import dependency stood at approximately 94 percent. Seventy percent of crude oil imports passed through the Strait of Hormuz. Twenty-five percent of LNG imports followed the same route. According to analysis from the Korea Economic Research Institute (KEI), while petroleum held the largest share of South Korea's total energy imports, its use was predominantly "non-energy." Petroleum as raw material for manufacturing advanced products like semiconductors. Transportation fuel came second. When rising energy costs combined with fluctuating industrial input requirements for advanced technology products, the conflict's persistence held potential to create ripple effects across the Korean and global economies.

President Lee Jae-myung convened an emergency economic assessment meeting at the Blue House. In a March 9 national address, the president stated that the Middle East crisis was imposing "considerable burden" on the Korean economy, which depends heavily on trade and energy imports. He instructed preemptive action to manage volatility expansion in financial and foreign exchange markets. He announced plans to "promptly introduce" a fuel price ceiling. It was the first time in thirty years.

According to data from the Korea National Oil Corporation (KNOC) and analysis by S&P Global, South Korea held government-managed strategic reserves of 101 million barrels. Joint reserves of approximately 10 million barrels, including 4 million barrels of Kuwaiti crude and 4 million barrels from the Abu Dhabi National Oil Company (ADNOC), added further security. On March 11, South Korea decided to participate in the International Energy Agency's decision to release 400 million barrels, committing to release 22.46 million barrels. It was the largest release in Korean history. After the release, 77.64 million barrels of government reserves would remain.

Strategic reserves buy time. Yet they could not solve one problem: naphtha.

Naphtha is a light fraction produced during crude oil refining and serves as a basic raw material for the petrochemical industry. Naphtha cracking centers in Ulsan, Yeosu, and Daesan thermally decompose this into basic chemicals like ethylene, propylene, and butadiene, which then become plastics, synthetic fibers, synthetic rubber, vinyl, and synthetic resins. From trash bags to ramen packaging, washing machine components, and semiconductor cleaning agents. South Korea depended on imports for approximately 45 percent of its naphtha demand, with 77 percent of that coming from the Middle East.

When the Strait of Hormuz closed, logistics ceased. Typically, Korean naphtha cracking centers begin replenishing inventory after January, but geopolitical tensions had halted shipments entirely. Most naphtha cracking centers could operate on existing inventory for roughly one and a half months. A statement from a major Korean petrochemical company official appeared in industry publications: "We have no choice but to reduce operations."

Bloomberg News published an article titled "Oil Crisis Threatens South Korea's Trash Bags and Ramen Supply" shortly after LG Chemical, South Korea's leading petrochemical company, announced it would suspend operations at one of its three naphtha cracking centers. The Yeochun NCC declared force majeure, stating it had no choice but to operate all facilities at minimum capacity due to difficulty securing raw materials amid escalating Middle East tensions.

Simultaneous energy conservation campaigns toward the public began rolling out. According to CNN reporting, the Korean government advised citizens to "shorten showers" and urged them to "charge mobile phones during daylight hours." The rationale was that charging electrical devices during peak sunlight hours when solar power generation reached maximum capacity would reduce the load on gas and coal power plants. Vehicle odd-even rationing also took effect in the public sector, limiting driving based on license plate numbers.

Coal-fired power plant environmental regulations were relaxed, and plants began operating at maximum output. On March 27, Deputy Prime Minister and Minister of Economy and Finance Gu Yun-chul held a joint press conference at the Government Complex Seoul. "Under grave awareness equivalent to economic wartime conditions, the government will devote full effort to emergency response while preparing for worst-case scenarios." The measures he announced were as follows: naphtha export controls would take effect Friday. Panic buying of urea and urea solution (essential liquids for reducing diesel vehicle emissions) would be banned starting that day. Crackdowns on illegal misconduct would intensify, and imports would expand.

Park Dong-il, director of industrial policy at the Ministry of Trade, Industry and Energy, stated at a business meeting: "Naphtha exports have been banned at the government level, and we are considering the situation surrounding petrochemical products very seriously." The government forced refiners to redirect naphtha production toward the domestic market rather than exports and secured authority to direct naphtha production and distribution. According to Energy Ministry data, South Korea was exporting approximately 11 percent of domestically produced naphtha, and this volume would now return to domestic users. The ban period was five months. Priority supply was guaranteed to medical, critical industries, and essential consumer goods sectors.

Deputy Minister Gu also previewed a second phase of response: in April, a "war supplementary budget" of approximately 25 trillion won would be expeditiously drawn up using excess tax revenue as the source. In the third phase, should conditions extend beyond May into the longer term, the government would proactively prepare additional economic stabilization measures and implement them immediately. All policy tools, including fiscal, tax, and financial regulatory measures, would be mobilized, and the most effective policy combinations would be deployed according to scenario-based response plans divided into three phases.

That same day, President Lee Jae-myung visited the Korea National Oil Corporation's storage facility in Seosan, South Chungcheong Province, where he held an on-site discussion meeting with executives from LG Chemical, Lotte Chemical, Hanwha TotalEnergies, and Hyundai Chemical. The LG Chemical CEO expressed gratitude to the government for supporting Russian naphtha purchases and payments. South Korea had halted trading in Russian petroleum since 2022. Faced with crisis, that principle was being revised.

KEI's analysis outlined this crisis's ripple scope with precision. Recovery from surging oil prices and supply chain shortages would require months to years. Impact extended beyond energy across multiple dimensions: economic shock from soaring oil prices and supply chain shortages; short-term pressure on the won and KOSPI; delayed-payment risks for tens of billions of dollars in Korean construction investments in the Middle East; and unnecessary strain on the U.S.-South Korean alliance. The 2026 growth forecast was marginally downward-adjusted from the existing 2 percent to 1.9 percent. The 0.1 percentage point decline appeared modest numerically, but the industrial field paralysis concealed behind it was something numbers could not capture.

17.3 Japan: Record Strategic Reserve Release, Request to Refrain from Hoarding Toilet Paper

On March 11, Prime Minister Sanae Takaichi announced Japan would release 80 million barrels from strategic reserves. It was the largest scale since the strategic reserve system was established in 1978. Japan did not await the IEA's coordinated decision. It moved first independently. On March 16, actual release began: fifteen days of supply from private mandatory reserves and thirty days from national reserves. Combined, the release equaled 45 days of national petroleum demand.

One figure lay behind this decision: 95.1 percent. The Middle East's share of Japanese crude oil imports as of January 2026, according to official Ministry of Economy, Trade and Industry (METI) data. The share transiting the Strait of Hormuz was approximately 73.7 percent. With Russian crude imports reduced, Middle Eastern dependency had actually risen to 96 percent. If this route closed, Japan's energy lifeline would be severed.

Japan's strategic reserves ranked among the world's highest. According to analysis by CSIS (Center for Strategic and International Studies), approximately 470 million barrels existed: 146 days of national reserves, 101 days of private mandatory reserves, and 7 days of joint reserves with Middle Eastern oil-producing nations. Combined, 254 days of supply. LNG inventory also totaled approximately 4 million tons, representing about three weeks of total consumption. A relatively sturdy shield.

Yet in a survey conducted by Asahi Shimbun on March 14 and 15, 90 percent of respondents answered that they felt "somewhat" or "greatly" anxious about the conflict's impact on the Japanese economy. A shield's presence and fear were separate matters.

The most symbolic scene fear created was the toilet paper aisle. During the first oil crisis in 1973, rumors spread in Japan that petroleum shortages would halt toilet paper production, triggering nationwide hoarding. Photographs of people queuing at stores to hoard toilet paper carved themselves deeply into Japanese collective memory. In March 2026, that memory resurfaced. Social media began circulating speculation about potential shortages of toilet paper and daily necessities.

Manufacturing trade associations immediately moved to contain the damage. They stated that Japanese toilet paper was produced almost entirely domestically and was not vulnerable to Middle East supply chain disruptions. The government repeated the same message: "Buy according to need, not according to fear." The goal was preventing the kind of panic buying that had emptied shelves during the pandemic.

The structural question this crisis posed to Japan diverged at LNG. Unlike crude oil, Japanese LNG imports showed only about 6.3 percent dependency on the Strait of Hormuz. The largest suppliers were Australia (39.7 percent), Malaysia (14.8 percent), and Russia (8.9 percent), whose LNG did not transit Hormuz. An asymmetrical structure existed. Electricity was relatively secure, but crude oil represented a critical vulnerability. With petroleum products comprising approximately 35 percent of Japan's primary energy supply, blocking the crude oil route meant direct hits to gasoline, heating oil, plastics, and transportation costs. Impact on households and industry emerged far faster and harsher than effects on electricity bills.

According to estimates from the Nomura Research Institute (NRI), if crude oil maintains $120-130 per barrel, Japan's 2026 GDP will decline 0.6 percent. If the blockade lasts a year, gasoline prices will exceed 328 yen per liter, and household costs will rise roughly 36,000 yen annually (about 330,000 won). The government had been holding down gasoline retail prices to 161-165 yen per liter through subsidies, but estimates suggested prices would spike to 185-200 yen without them.

Prime Minister Takaichi declined President Trump's request to dispatch naval forces to the Strait of Hormuz. She cited constitutional constraints. Instead, she promised diplomatic engagement with countries around the Middle East. She said regional peace was essential to both Japan and the international community. It was a moment that starkly revealed Japan's position: managing economic crisis without military contribution.

CSIS identified structural changes this crisis would trigger. Expansion of nuclear power, controversial since Fukushima in 2011, would gain momentum. In its Seventh Energy Basic Plan, released in 2025, the Japanese government had set a policy to maximize nuclear energy use to respond to data center power demand and electrification trends. As of March 2026, 15 reactors were operational, with 3 more preparing to restart. The assessment was that this energy crisis would strengthen the energy security case for reactor restarts and new construction.

During Iraq's invasion of Kuwait in 1990, the Strait of Hormuz itself did not close. Oil could be physically moved. It was managed through strategic reserve releases and alternative sourcing from non-Middle Eastern producers. 2026 is structurally different. Oil exists, and producing nations want to export it, but it cannot be physically transported. Replenishing released reserves is impossible as long as the blockade persists. Stocks only diminish. Eighty million barrels bought 45 days. If the blockade extends beyond three months, massive drawdown of reserves and sustained price spikes become unavoidable.

17.4 Vietnam and Myanmar: Work-from-Home Recommendations and Alternate-Day Driving Rules

Myanmar's National Defense and Security Council (NDSC) announced a nationwide fuel rationing system on March 3rd, with implementation beginning March 7th. It was an Odd-Even Driving Rule restricting civilian vehicle road use by license plate numbers. On odd-numbered dates, only vehicles with license plates starting with odd numbers (1, 3, 5, 7, 9) could drive; on even-numbered dates, only even numbers (2, 4, 6, 8, 0) were permitted. Electric vehicles were exempt. Public buses, taxis, tanker trucks, freight vehicles, construction vehicles, and emergency service vehicles like ambulances and garbage trucks could operate daily.

On March 22nd, the military government went further. It mandated work-from-home on Wednesdays for all civil servants and government employees, effective March 25th. "This measure aims to conserve fuel. Civil servants and government employees are not permitted to travel or use vehicles for non-official purposes on that day." These were the words in a statement published in the state daily The Mirror. The government recommended that private enterprises adopt the same measure where possible.

A civil servant in the capital, Naypyidaw, offered candid thoughts to Mizzima news agency: "I have doubts about the work-from-home system. Most of our government work remains paper-based and not digitized. Even though Wednesday is designated as work-from-home, I suspect many of us will still have to come in."

The next phase reported by Bloomberg was tighter. A barcode and QR code-based fuel rationing system. Vehicles would be restricted to refueling once or twice per week depending on engine size. The Energy Ministry announced it had secured 50 days of fuel reserves and was pursuing additional imports through alternative routes beyond existing channels. However, long lines were already forming at filling stations in Yangon and Mandalay starting March 4th. In a country with over 600,000 registered civilian vehicles, fear of fuel scarcity spread rapidly.

Myanmar's situation differed qualitatively from other Asian nations because the country was already in chronic foreign exchange crisis and civil conflict following the military coup. For a military government struggling to secure hard currency under international sanctions and isolation, oil imports requiring dollar payment were a double burden. When diesel fuel for generators powering hospitals and cell towers ran dry, it was only a matter of time before basic state functions stopped. Some domestic airlines halted operations, and rising fuel prices drove airfares to spike.

Vietnam faced a structurally different crisis. Rising as "the world's factory" and drawing production bases from global companies like Samsung, Apple suppliers, and Nike, the country was forced to halt its growth engine when energy supply chains seized up. According to Al Jazeera, Vietnam announced it would secure roughly four million barrels of crude oil from non-Middle Eastern countries. Sam Reynolds, a researcher at the U.S. Institute for Energy Economics and Financial Analysis (IEEFA), pointed out this volume represented only about six days of Vietnam's consumption. Accounting for reported reserves of 20 days' supply, the assessment was that without additional crude inflow, "the risk of fuel shortage is very high."

The Vietnamese government recommended work-from-home for businesses and encouraged citizens to use public transport, bicycles, and carpools. It began drawing down the Fuel Price Stabilisation Fund. It granted "Priority Pass" privileges to coal shipments to reduce LNG consumption and shift to coal power generation. Vietnam's Civil Aviation Authority (CAAV) warned that export restrictions from China and Thailand could cause jet fuel shortages after April. Vietnam imports more than two-thirds of its jet fuel, with roughly 60 percent coming from China and Thailand.

Laos faced the most acute situation in the entire Mekong region. More than 40 percent of the country's 2,538 filling stations had closed during the previous week, according to reports. At remaining stations, long lines and rationed supply continued. Universities received directives to reduce in-person classes to three days per week. Students were urged to use bicycles and public transport. Civil servants were advised to work from home. Authorities in Champasak Province imposed fines on three filling stations in the Paksong area for selling above government-regulated prices.

Cambodia experienced a gasoline shortage crisis the previous week. Sokimex, a major oil and LPG importer, announced it would suspend LPG supplies from April due to transportation disruptions. Cambodia has no refining capacity. Based on 2024 figures, it had depended on Thailand and Vietnam for over 60 percent of oil imports, but when both countries restricted exports, it had to quickly reroute supplies through Singapore and Malaysia. Energy Minister Keo Rottanak said imports from these countries were increasing and that partnerships with global suppliers like Total and Chevron were helping mitigate immediate risks.

In poor nations, energy crisis was not mere inconvenience. It meant freedom of movement stripped away, factories grinding to a halt, schools closing their doors, hospital generators running dry. It was the process of a state's basic functions switching off, one by one.

17.5 China and Thailand's Oil Export Bans: Cascading Effects of National Self-Interest

Thailand locked the gates first, on March 6th. Then came China.

Bloomberg reported on March 5th that the Chinese government had instructed its largest refineries to halt diesel and gasoline exports. It was only six days into the war. By March 11th, the ban had expanded to all refined fuel products: gasoline, diesel, and jet fuel. It applied immediately to all cargo not yet cleared by customs. Supplies bound for Hong Kong and Macau and bonded fuel for international aircraft refueling were exceptions, but all other doors closed.

China was Asia's third-largest fuel exporter, after South Korea and Singapore. In 2025 it exported roughly 41 million tons of refined petroleum products worth $22 billion. Primary export destinations were Singapore, South Korea, Japan, and Southeast Asian nations like Vietnam and the Philippines. This volume simply vanished from the market.

There was reason China could remain relatively calm, unlike other Asian nations. Analysis from The Diplomat clarified this. When war began, China held combined strategic and commercial oil reserves of roughly 1.2 to 1.3 billion barrels, about 100 days' worth of 2025 consumption. It further increased crude reserves in January and February 2026. Daily imports of 11.99 million barrels plus domestic production of 4.42 million barrels meant 16.41 million barrels daily were being supplied to refineries.

Critically, Iran allowed crude oil destined for China to pass through the Strait of Hormuz despite its effective blockade. This was a privilege unique to China, notable enough that some Western governments took notice. Beyond the Middle East, a diversified import structure brought crude from Australia, Central Asia, Russia, South America, and Africa. While Japan and South Korea sourced nearly all natural gas imports via seaborne LNG, China sourced more than half its gas through land pipelines like Russia's Power of Siberia 1. One strait could close, but other routes remained open.

Yet China's national-first decision hit the rest of Asia hard. According to Modern Diplomacy's analysis, China's export ban sent Asian diesel derivative prices to $150 per barrel, jet fuel to $163, and gasoline to $139.80 as of March 17th, a spike from pre-war levels of $79-92. Australia, Bangladesh, and the Philippines had relied heavily on Chinese fuel supplies, and they took direct hits.

It was not just China. Thailand banned most refined fuel exports, except to Laos and Myanmar, and South Korea capped exports at the prior year's level while considering further restrictions. Indian and Japanese refineries preferred to avoid overseas sales, choosing instead to meet domestic demand or capture inflated regional prices. A South Korean refinery official put it plainly: "Refineries must prioritize supplying the domestic market when petroleum products are scarce." Analysts estimated that combined, these measures could force up to six million barrels per day of reduced refining capacity across Asia.

The cascade struck the weakest link first: Cambodia. With no refineries and no meaningful reserves, the country had normally imported refined fuel from Thailand, Vietnam, and China. When all three restricted or banned exports, Cambodia had to send ships to Singapore and Malaysia, paying premium prices for fuel. In Laos, 40 percent of filling stations closed, and drivers waited for hours. ASEAN's economic ministers warned that supply disruptions were "raising freight, insurance, and logistics costs, placing inflationary pressure on energy, food, and other essentials." If the conflict dragged on, they cautioned, it could "affect the livelihoods of millions in the region and undermine ASEAN's economic progress."

On March 31st, Reuters reported that China appeared ready to extend its refined fuel export ban through April. However, small exceptions might be granted upon request from regional nations. Discussions were underway for limited April exports of diesel, jet fuel, and gasoline to Southeast Asian countries. Permitted volumes would be 150,000 to 300,000 tons. Spot exports remained prohibited. No one could guarantee whether this volume would be sufficient to ease the crisis.

Malaysian fertilizer manufacturers halted new orders due to supply chain disruptions and soaring raw material costs. This led to rising palm oil production costs, ripples that could spread through global food supply chains. Malaysian semiconductor firms worried about helium supply disruptions. While not yet affecting actual operations, a prolonged crisis could change that. Petrochemical firms like Singapore's Aster Chemicals and Energy and Indonesia's PT Chandra Asri Pacific declared force majeure, notification that they could not fulfill contract obligations.

This was the landscape created by Asia's energy austerity. The integrated energy supply chain that had been tightly woven through comparative advantage and free trade in peacetime unraveled in mere weeks. Nations watched neighboring factories shut down and fuel lines grow endless, yet found no choice but to guard their own fuel tanks first. When energy grows scarce, supply chains tear at the seams. And those seams are always where the poorest countries lie, the smallest economies, places without reserves and without refineries.

The blockade that began at the Strait of Hormuz reached thousands of kilometers away: filling stations in Bangkok, LPG suppliers in Phnom Penh, university classrooms in Vientiane, diesel generators in Yangon. War in the Middle East was commanding Asia's daily life. And this destruction of the ordinary was still only beginning.

AI specialist and lawyer Kim Kyung-jin

Specialist in AI legal policy, former National Assembly member, author of multiple works

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