Asian Economies Hit Hardest by Energy Crisis Caused by War with Iran

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The energy crisis caused by the war with Iran and the closure of the Strait of Hormuz has hit Asian economies the hardest, with key US allies like Japan, the Philippines, and Vietnam facing severe consequences. Japan is having to tap into its strategic oil reserves, while other countries are implementing pandemic-like restrictions to reduce fuel demand. The lack of warning and assistance from the US has angered Washington's Asian partners, who are now reconsidering plans for further investment and cooperation.

Why it matters

The energy crisis has exposed the vulnerability of US allies in Asia, who are heavily dependent on oil imports through the Strait of Hormuz. The strained relations and economic impacts could undermine long-standing security and economic partnerships in the region, with potential geopolitical ramifications.

The details

Japan receives 90% of its oil imports through the Strait of Hormuz and is now having to tap into its 470 million barrel strategic reserves, pouring 80 million barrels onto the market. The Philippines and Vietnam have been forced to return to pandemic-era restrictions to reduce fuel demand. US allies in the region are also reconsidering plans for further investment and military cooperation with the US, angered by the lack of warning and assistance from Washington.

• The energy crisis began with the outbreak of war between the US and Iran, leading to the closure of the Strait of Hormuz in 2026.
• Japan has had to release 80 million barrels from its 470 million barrel strategic oil reserves to cope with the shortages.

What’s next

The US will likely need to work to repair relations with its key Asian allies and provide assistance to mitigate the economic impacts of the energy crisis, or risk further damage to important regional partnerships.