Asia Bulletin: Fuel Shortage Impacts in Asia

Date Published: April 7, 2026

Summary

Ongoing U.S. and Israeli airstrikes on Iran, Iran’s retaliatory strikes, and the closure of the Strait of Hormuz have disrupted the oil and gas industry across Asia. Liquified natural gas (LNG) is one of the most prominent forms of gas transported through the Strait on ships and is a driving factor in shortage concerns due to the wide spectrum of uses that many sectors depend on. Several major oil and gas producers have suspended operations for the duration of the conflict, which has caused price spikes as supply decreases. In response, China has halted nearly all oil exports to preserve current supplies. This report analyzes how the oil and gas shortages caused by the conflict in the Middle East affect Asia and private sector operations.

Background

On February 28, 2026, the United States and Israel conducted joint airstrikes on Iran in an aerial campaign to eliminate the threat of Iranian short range ballistic missiles and the threat posed by their navy, against naval assets.[1] Iran responded with missile and drone strikes across Saudi Arabia, Bahrain, Kuwait, the United Arab Emirates, Oman, Iraq, Jordan, Qatar, and Israel. To prevent damage, Qatar shut down its liquefied natural gas (LNG) production.[2] Qatar’s LNG company, Qatari Energy, supplies roughly 20% of the world’s LNG, and about 83% of its clients are in Asia. Israel halted production at Chevron’s Leviathan oil field in the Eastern Mediterranean because of ongoing threats, and the Kurdistan Region of Iraq ceased all production, which accounts for over 200,000 barrels of oil per day (b/d).[3] Saudi Arabia’s national oil company, Saudi Aramco, temporarily halted production at facilities that produce 500,000 b/d because of ongoing strikes.[4]

On March 6, Iran closed the Strait of Hormuz in response to U.S. and Israeli military operations. The Strait of Hormuz serves as a critical transit chokepoint for oil and gas shipments out of the region, carrying an average of 21 million b/d. Roughly 20% of the world’s crude oil and natural gas and 30% of Asia’s LNG transit the Strait, along with about 60% of Asia’s crude oil imports.[5] Anticipating an oil shortage, China—historically one of Asia’s largest oil exporters—halted most of its fuel exports to prevent mass shortages at home. China’s decision to prioritize domestic supply has begun to contribute to the strain on Asian economies as LNG prices continue to rise.

The following sections highlight the impact on countries throughout Asia.

South and Central Asia

Bangladesh: Bangladesh imports approximately 95% of its fuel.[6] The government is diversifying import sources, but long lines at fuel stations, panic buying, and hoarding are happening in Dhaka, with the situation even more acute outside the capital.[7] The government has implemented rationing measures to prevent total shortages, limiting individuals to 40 liters per day. Restricted LNG access slows the transport of goods and reduces working hours as businesses adjust to the shortage. Large groups of individuals have been reportedly forcing fuel stations to open early and taking large quantities of fuel without formal payment.[8]

India: Indian crude oil import costs have jumped approximately 112% since February due to the ongoing conflict in the Middle East.[9]  Shortages have been reported across the country as fuel distribution struggles to keep up with demand, although the government announced it has two months of crude supplies.[10] LNG cylinder supply companies are reporting interruptions in their distribution operations amidst the growing crisis, impacting restaurants and service industries that depend on LNG. India’s strategic reserves, currently at 66% of its capacity, can hold 5.3 million tons of crude oil.[11] India has not yet utilized its reserves.

Pakistan: LNG from Qatar and UAE account for 99% of Pakistan’s LNG imports[12]. To reduce energy and fuel consumption, Pakistan closed schools for two weeks; implemented 4-day work weeks; and granted 50% work-from-‑home arrangements for government staff.[13]150% since March 1[14]. Agriculture is facing difficulty as the cost of fertilizers such as DAP and urea are rising, and shortages of wheat, cotton, and sugarcane are compounding the growing economic issues.

Southeast Asia

Philippines: Rising fuel costs have triggered large protests and strikes across the Philippines. Recent strikes in Manila by transport workers demanding lower fuel prices blocked several major routes in and around the capital.[15] On March 24, President Ferdinand Marcos Jr. declared a state of emergency and created a crisis task force to address the escalating fuel prices and threats to energy and other critical supplies

Vietnam: Vietnam removed import tariffs on certain goods and resources to offset the financial pressure caused by fuel shortages.[16] Vietnam imports about 60% of its jet fuel from China and Thailand[17]. With China cutting many of its exports, the aviation sector is contemplating limiting domestic flights to cut down on cost. With shipments of liquified petroleum gas (LPG) from the Middle East to Vietnam halted by the closure of the Strait, mounting economic strain of operating costs for Vietnamese steel, textile, and footwear manufacturers continue to climb.

East Asia

South Korea: South Korea depends heavily on oil imports from the Middle East for both internal consumption and refining for resale. Current reserves reportedly hold about 141 million barrels of oil, which could sustain the country for more than 200 days if exports were halted.[18] South Korea typically refines a large component of its imported crude oil before reselling it to other countries in the region. Amid the current shortage, if South Korea maintains its current export rate of nearly 52% of all crude oil imports, along with consuming about 1.8 million barrels per day domestically, its reserves will last only around 60 days.[19] If the Strait of Hormuz remains closed through April, South Korea will likely confront an energy crisis by May.

Japan: Japan’s energy sector remains highly vulnerable to disruptions in global supply. One of the world’s largest fossil f‑uel importers, Japan sources about 80% of its energy from imports, with roughly 95% of its crude oil coming from the Gulf region.[20] Japan recently released 80 million barrels from national reserves to mitigate potential financial hardship and capped fuel prices at an average of 170 yen (USD $1.07) per liter, drawing on approximately USD $5 billion in reserve funds for subsidies. Although these measures are currently stabilizing, prolonged closure of the Strait of Hormuz could still trigger a crisis.

China: China has taken steps to mitigate the domestic impact of halted fuel exports out of the Gulf region.  By pausing its own fuel exports, Beijing has helped shield Chinese consumers from the full effects of global shortages. According to estimates from Columbia University and Chinese officials, China’s oil reserves exceed 1.7 billion barrels.[21] Authorities have adopted a cautious approach to fuel allocation, raising prices over recent months and then capping fuel costs to protect Chinese consumers from further financial strain.

Private Sector Impact

The closure of the Strait of Hormuz creates significant challenges for U.S. private sector operations in Asia. Heavy dependence on crude oil and LNG for transportation and manufacturing raising fuel prices, and reduced employee hours will likely slow overseas operations, Additionally, smaller economies that do not possess the threshold to withstand significant dips may experience long-term impacts.

If the closure continues, the risk of civil unrest will grow, especially in countries with strained economies. Energy consumption and the heavy reliance on fuel in both agriculture and transportation will increasingly strain—and further disrupt—the normal operations of commercial businesses. These disruptions will most likely impact middle- and lower-class families, leading to an increased likelihood of unrest. OSAC members should avoid all protests, as demonstrations can quickly turn violent. OSAC members are advised to enroll in the Smart Traveler Enrollment Program (STEP) in order to receive up-to-date information on growing threats or changes to the security environment.

Additional Information

For more information, contact OSAC’s Asia team.

• OSAC Country Pages: Bangladesh, India, Pakistan, Philippines, Vietnam, South Korea, Japan, China
• OSAC Country Security Reports: Bangladesh, India, Pakistan, Philippines, Vietnam, South Korea, Japan, China

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