Flashpoints | Economy | East Asia | Southeast Asia

Asia’s Energy Triage Amid the Iran War 

The conflict is exposing a hierarchy of energy vulnerability across the Indo-Pacific.

Twelve days into the Iran war, the Strait of Hormuz is effectively closed. Roughly 20 percent of global oil and LNG supply remains offline. The impact is being clearly felt on the other edge of Asia. On March 9, South Korea’s KOSPI plunged 6 percent and Japan’s Nikkei 225 fell more than 5 percent. Brent crude breached $100 a barrel for the first time since Russia’s 2022 invasion of Ukraine. In Manila, the government imposed a four-day workweek – a wartime energy-conservation measure the country has rarely, if ever, resorted to in peacetime.

The pain, though, is not distributed anything like evenly. 

Four economies – China, India, Japan, and South Korea – account for nearly 69 percent of the crude and condensate that normally transits Hormuz. Their capacities to absorb the shock, though, are different.

Start with China, which is bruised but better positioned than almost anyone. Beijing holds an estimated 1.2 billion barrels of onshore crude stockpiles – the world’s largest – enough to cover roughly 108 days of imports at current refinery runs. Oil and gas supply just 4 percent of China’s electricity, a fraction of the 40 to 50 percent share common elsewhere in Asia. And its renewables buildout met around 80 percent of new electricity demand in 2024, a cushion that no other major importer can match.

But here is what makes China’s position potentially more than just a buffer story. Iran announced on March 5 that the Hormuz closure applies only to vessels from the United States, Israel, and their Western allies. Since then, at least two bulk carriers have transited by broadcasting “CHINA OWNER” on their tracking systems, and Reuters has reported that Chinese-Iranian talks on a safe-passage arrangement are underway.

How far does this actually go? An analysis by the Center for Strategic and International Studies (CSIS) published this week urged caution: ship-tracking data so far shows that Chinese vessels have not received reliable assurances, and even vessels with informal arrangements would be taking enormous risks transiting an active warzone. The pattern, in other words, is suggestive but unproven.

If it solidifies, though, the implications are enormous. Chinese-flagged vessels moving through Hormuz while Japanese, South Korean, and Western ships are barred would not be a temporary logistical quirk. It would be the embryo of a two-tier maritime order at the world’s most important energy chokepoint – one where alignment with Beijing confers a tangible supply advantage. Nothing like that has existed in the modern energy system.

At the opposite end of the spectrum, Japan and South Korea face the starkest exposure. Japan sources more than 90 percent of its crude from the Middle East, with about 70 percent transiting Hormuz. South Korea buys 70 percent of its oil from the region. Both hold substantial strategic oil reserves – over 200 days of cover – so crude is manageable in the short term.

LNG is the real problem.

South Korea’s working LNG inventory at import terminals covers roughly nine days of consumption, according to a parliamentary disclosure last week. Japan holds perhaps two to four weeks. These are not strategic reserves; they are operational buffers, and they are draining fast.

The policy response has been swift. South Korean President Lee Jae-myung announced fuel price caps – the first in nearly 30 years – and a 100 trillion won ($68.3 billion) stabilization fund. Japan’s refiners have asked the government to release strategic oil reserves. Both countries are scrambling for emergency spot LNG from Australia, Canada, and the United States. But alternative cargoes take weeks to arrange, and they cannot come close to replacing the volume Qatar alone provides.

Across Southeast Asia, the picture is uneven. Singapore and Thailand are the region’s largest importers of Middle Eastern gas: Qatar supplied 42.5 percent of Singapore’s LNG and 42.69 percent of Thailand’s in 2025. Thailand has suspended crude exports since March 1. The Philippines – which imports nearly all its crude from the Middle East – imposed a four-day government workweek, ordered agencies to cut energy consumption by 10 to 20 percent, and is studying emergency fuel subsidies. And Indonesia, having recently signed a trade deal tilted toward U.S. fossil fuel imports, now faces the irony of deepening its hydrocarbon dependence at precisely the moment the global fossil fuel market is convulsing.

Russia: The Quiet Winner

Who benefits from all this disruption? One answer, uncomfortable but unavoidable, is Moscow.

Russian seaborne oil does not transit Hormuz. It reaches Asia via Baltic, Black Sea, and Pacific routes. With Gulf barrels stranded, India and China have powerful incentives to deepen their reliance on Russian supply, and Russia’s Deputy Prime Minister Alexander Novak has said publicly that Moscow is “ready to increase supplies” to both. Russian crude has climbed well above Moscow’s $59-per-barrel budget benchmark for 2026. 

Higher oil revenues directly strengthen Russia’s ability to finance its war in Ukraine: state oil and gas revenue had hit a four-year low in January, and the Iran war has reversed that trajectory overnight. As the Foreign Policy Research Institute has argued, the crisis eases the economic pressure on Russian President Vladimir Putin to negotiate – directly undercutting Washington’s own stated objectives in Ukraine.

The contradiction runs even deeper than that. Washington sanctioned Rosneft and Lukoil last year to choke off Russian war finances. It slapped punitive tariffs on India to discourage purchases of Russian crude, and it worked – Indian imports of Russian oil fell sharply in the months before the war. Then, 10 days into the Iran conflict, Treasury Secretary Scott Bessent issued a 30-day waiver telling Indian refiners to go ahead and buy the very oil Washington had spent months trying to block. The alternative, apparently, was a global supply collapse.

India’s government responded by insisting it never needed American permission to buy Russian oil in the first place. Indian state refiners have already committed to purchasing 20 millions barrels of stranded Russian crude. In the space of a week, Moscow – not Washington – has become India’s indispensable energy partner.

If you’re looking for reasons not to panic, they exist. U.S. Energy Secretary Chris Wright has predicted the Hormuz bottleneck will last “weeks, certainly not months.” Strategic oil reserves across Asia’s major economies are substantial – Japan alone holds over 250 days of cover. American production is at record highs.

Three factors, though, undercut this optimism. The appointment of Mojtaba Khamenei as Iran’s next supreme leader signals hardline continuity, not capitulation. This is a man whose ties to the Revolutionary Guard run deep, and who has every personal reason to prosecute the war with maximum intensity. Physical damage to Gulf infrastructure, including Saudi Arabia’s Ras Tanura refinery and multiple storage terminals, will take weeks or months to repair no matter what happens at the negotiating table.

And then there is LNG. This is where the optimists’ case falls apart. There are no strategic LNG reserves comparable to oil stockpiles. The global LNG market was already tight before the war. And major Protection and Indemnity (P&I) insurers have canceled Gulf war-risk coverage entirely, which means commercial shipping will not resume until underwriters see sustained evidence of safety – not just a ceasefire announcement, but weeks of uneventful transits. That is a high bar.

Looking past the immediate crisis, three structural shifts are likely to harden.

Energy security will be permanently reframed across the Indo-Pacific – not as a climate aspiration or a talking point at ASEAN summits, but as a core national security imperative. Every kilowatt-hour generated from domestic renewables is now a unit of strategic autonomy. China’s massive renewables buildout already looks less like environmental policy and more like military-industrial foresight. Other governments will draw the lesson.

The geopolitics of overland supply will gain new urgency, too. Russia’s pipeline routes to China and Central Asian gas corridors bypass every maritime chokepoint the crisis has exposed, and Beijing’s Power of Siberia 2 pipeline agreement, signed on September 2, 2025, fits this logic precisely. For economies that lack overland options – which is most of maritime Asia – the push will be toward supplier diversification, expanded reserves, and contracts that specify Hormuz-free delivery routes, even at a premium.

And if the emerging Chinese privilege in the Strait of Hormuz solidifies, it would represent something genuinely new in Asia’s energy order. Allied democracies that depend on the same waterway as China but cannot access it on the same terms face a structural disadvantage that reserve-building alone cannot offset. For Tokyo, Seoul, and Canberra, this is a stress test – not just of energy policy, but of the broader strategic architecture they have built their security on.

Asian governments did not choose this war, but it is testing them nonetheless. It’s becoming increasingly clear which of them were prepared – and which were not.

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Twelve days into the Iran war, the Strait of Hormuz is effectively closed. Roughly 20 percent of global oil and LNG supply remains offline. The impact is being clearly felt on the other edge of Asia. On March 9, South Korea’s KOSPI plunged 6 percent and Japan’s Nikkei 225 fell more than 5 percent. Brent crude breached $100 a barrel for the first time since Russia’s 2022 invasion of Ukraine. In Manila, the government imposed a four-day workweek – a wartime energy-conservation measure the country has rarely, if ever, resorted to in peacetime.

The pain, though, is not distributed anything like evenly. 

Four economies – China, India, Japan, and South Korea – account for nearly 69 percent of the crude and condensate that normally transits Hormuz. Their capacities to absorb the shock, though, are different.

Start with China, which is bruised but better positioned than almost anyone. Beijing holds an estimated 1.2 billion barrels of onshore crude stockpiles – the world’s largest – enough to cover roughly 108 days of imports at current refinery runs. Oil and gas supply just 4 percent of China’s electricity, a fraction of the 40 to 50 percent share common elsewhere in Asia. And its renewables buildout met around 80 percent of new electricity demand in 2024, a cushion that no other major importer can match.

But here is what makes China’s position potentially more than just a buffer story. Iran announced on March 5 that the Hormuz closure applies only to vessels from the United States, Israel, and their Western allies. Since then, at least two bulk carriers have transited by broadcasting “CHINA OWNER” on their tracking systems, and Reuters has reported that Chinese-Iranian talks on a safe-passage arrangement are underway.

How far does this actually go? An analysis by the Center for Strategic and International Studies (CSIS) published this week urged caution: ship-tracking data so far shows that Chinese vessels have not received reliable assurances, and even vessels with informal arrangements would be taking enormous risks transiting an active warzone. The pattern, in other words, is suggestive but unproven.

If it solidifies, though, the implications are enormous. Chinese-flagged vessels moving through Hormuz while Japanese, South Korean, and Western ships are barred would not be a temporary logistical quirk. It would be the embryo of a two-tier maritime order at the world’s most important energy chokepoint – one where alignment with Beijing confers a tangible supply advantage. Nothing like that has existed in the modern energy system.

At the opposite end of the spectrum, Japan and South Korea face the starkest exposure. Japan sources more than 90 percent of its crude from the Middle East, with about 70 percent transiting Hormuz. South Korea buys 70 percent of its oil from the region. Both hold substantial strategic oil reserves – over 200 days of cover – so crude is manageable in the short term.

LNG is the real problem.

South Korea’s working LNG inventory at import terminals covers roughly nine days of consumption, according to a parliamentary disclosure last week. Japan holds perhaps two to four weeks. These are not strategic reserves; they are operational buffers, and they are draining fast.

The policy response has been swift. South Korean President Lee Jae-myung announced fuel price caps – the first in nearly 30 years – and a 100 trillion won ($68.3 billion) stabilization fund. Japan’s refiners have asked the government to release strategic oil reserves. Both countries are scrambling for emergency spot LNG from Australia, Canada, and the United States. But alternative cargoes take weeks to arrange, and they cannot come close to replacing the volume Qatar alone provides.

Across Southeast Asia, the picture is uneven. Singapore and Thailand are the region’s largest importers of Middle Eastern gas: Qatar supplied 42.5 percent of Singapore’s LNG and 42.69 percent of Thailand’s in 2025. Thailand has suspended crude exports since March 1. The Philippines – which imports nearly all its crude from the Middle East – imposed a four-day government workweek, ordered agencies to cut energy consumption by 10 to 20 percent, and is studying emergency fuel subsidies. And Indonesia, having recently signed a trade deal tilted toward U.S. fossil fuel imports, now faces the irony of deepening its hydrocarbon dependence at precisely the moment the global fossil fuel market is convulsing.

Russia: The Quiet Winner

Who benefits from all this disruption? One answer, uncomfortable but unavoidable, is Moscow.

Russian seaborne oil does not transit Hormuz. It reaches Asia via Baltic, Black Sea, and Pacific routes. With Gulf barrels stranded, India and China have powerful incentives to deepen their reliance on Russian supply, and Russia’s Deputy Prime Minister Alexander Novak has said publicly that Moscow is “ready to increase supplies” to both. Russian crude has climbed well above Moscow’s $59-per-barrel budget benchmark for 2026. 

Higher oil revenues directly strengthen Russia’s ability to finance its war in Ukraine: state oil and gas revenue had hit a four-year low in January, and the Iran war has reversed that trajectory overnight. As the Foreign Policy Research Institute has argued, the crisis eases the economic pressure on Russian President Vladimir Putin to negotiate – directly undercutting Washington’s own stated objectives in Ukraine.

The contradiction runs even deeper than that. Washington sanctioned Rosneft and Lukoil last year to choke off Russian war finances. It slapped punitive tariffs on India to discourage purchases of Russian crude, and it worked – Indian imports of Russian oil fell sharply in the months before the war. Then, 10 days into the Iran conflict, Treasury Secretary Scott Bessent issued a 30-day waiver telling Indian refiners to go ahead and buy the very oil Washington had spent months trying to block. The alternative, apparently, was a global supply collapse.

India’s government responded by insisting it never needed American permission to buy Russian oil in the first place. Indian state refiners have already committed to purchasing 20 millions barrels of stranded Russian crude. In the space of a week, Moscow – not Washington – has become India’s indispensable energy partner.

If you’re looking for reasons not to panic, they exist. U.S. Energy Secretary Chris Wright has predicted the Hormuz bottleneck will last “weeks, certainly not months.” Strategic oil reserves across Asia’s major economies are substantial – Japan alone holds over 250 days of cover. American production is at record highs.

Three factors, though, undercut this optimism. The appointment of Mojtaba Khamenei as Iran’s next supreme leader signals hardline continuity, not capitulation. This is a man whose ties to the Revolutionary Guard run deep, and who has every personal reason to prosecute the war with maximum intensity. Physical damage to Gulf infrastructure, including Saudi Arabia’s Ras Tanura refinery and multiple storage terminals, will take weeks or months to repair no matter what happens at the negotiating table.

And then there is LNG. This is where the optimists’ case falls apart. There are no strategic LNG reserves comparable to oil stockpiles. The global LNG market was already tight before the war. And major Protection and Indemnity (P&I) insurers have canceled Gulf war-risk coverage entirely, which means commercial shipping will not resume until underwriters see sustained evidence of safety – not just a ceasefire announcement, but weeks of uneventful transits. That is a high bar.

Looking past the immediate crisis, three structural shifts are likely to harden.

Energy security will be permanently reframed across the Indo-Pacific – not as a climate aspiration or a talking point at ASEAN summits, but as a core national security imperative. Every kilowatt-hour generated from domestic renewables is now a unit of strategic autonomy. China’s massive renewables buildout already looks less like environmental policy and more like military-industrial foresight. Other governments will draw the lesson.

The geopolitics of overland supply will gain new urgency, too. Russia’s pipeline routes to China and Central Asian gas corridors bypass every maritime chokepoint the crisis has exposed, and Beijing’s Power of Siberia 2 pipeline agreement, signed on September 2, 2025, fits this logic precisely. For economies that lack overland options – which is most of maritime Asia – the push will be toward supplier diversification, expanded reserves, and contracts that specify Hormuz-free delivery routes, even at a premium.

And if the emerging Chinese privilege in the Strait of Hormuz solidifies, it would represent something genuinely new in Asia’s energy order. Allied democracies that depend on the same waterway as China but cannot access it on the same terms face a structural disadvantage that reserve-building alone cannot offset. For Tokyo, Seoul, and Canberra, this is a stress test – not just of energy policy, but of the broader strategic architecture they have built their security on.

Asian governments did not choose this war, but it is testing them nonetheless. It’s becoming increasingly clear which of them were prepared – and which were not.

Galuh Maulana Yusuf is a defense and military analyst based in Jakarta. An alumnus of Georgetown's Walsh School of Foreign Service, he specializes in geopolitics and OSINT.

China energy security

Iran War energy impact

Israel-U.S. strikes on Iran

Japan energy security

South Korea energy imports

Southeast Asia energy demand

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