As the US imposes its own blockade on shipping through the Strait of Hormuz following the collapse of talks with Iran at the weekend, we take a look at how major economies in Asia and Europe could be affected by further restrictions on passage through one of the world’s most critical choke points for energy supplies.
Who is most vulnerable in this energy crisis?
According to a recent report by Japanese investment bank Nomura, the regions most exposed to the tensions in the Persian Gulf are Asian economies, excluding China, followed by Europe. Asian economies are the primary destination for cargo passing through the Strait of Hormuz.
Among the most vulnerable net energy importers are Thailand, India, Indonesia, the Philippines, Germany, Italy and the United Kingdom.
The report said the impact would be more limited for major economies such as the United States and China, as well as for Canada, Norway, Spain, South Korea, Malaysia and Singapore.
However, Energy World Mag, an energy-focused data platform, said: “Over 97 per cent of Singapore’s energy comes from fossil fuels, leaving the country with no alternative if gas or oil imports get disrupted.”
How much do some affected economies rely on energy from the Middle East?
According to Nomura, more than 90 per cent of crude oil imports in Japan and the Philippines come from the Middle East, while 60 per cent of India’s liquefied natural gas (LNG) supplies are sourced from the region, leaving them highly exposed to supply concentration risks.
In some parts of Europe, the reliance on energy supplies from the Middle East is also significant. Qatari LNG accounts for around 10 per cent of Italy’s total gas consumption, while Middle Eastern oil made up about 12 per cent of the country’s crude imports last year, Reuters reported. In 2024, roughly 45 per cent of Italy’s LNG supply depended on imports from Qatar, according to the US government’s International Trade Administration.
Nomura estimates that a 10 per cent rise in energy prices would lower the gross domestic product of euro-zone countries by 0.2 percentage points cumulatively over two years.
To what extent will China and the US be affected?
Although roughly 65 per cent of China’s seaborne crude imports are sourced from the Middle East, Kpler, a provider of market intelligence, said its diversified energy mix, extensive coal reserves, and strategic oil stockpiles would help mitigate the impact of supply shocks.
The US – itself a major oil producer – sourced about 8 per cent of its crude oil imports from the Persian Gulf last year, according to data released by the US Energy Information Administration.
Where will global oil prices head next as the US blocks the strait?
Brent crude rose to nearly US$99 a barrel as of Tuesday afternoon, up from around US$75 when the US and Iran announced a ceasefire on April 7. Oil market executives have warned that prices could surge to US$140 to US$150 a barrel following the imposition of the US blockade.
Jorge Montepeque, managing director at Onyx Capital Group, told Bloomberg Television the US blockade could turn a regional conflict into a global one, potentially removing up to 12 million barrels from the market each day. -- SOUTH CHINA MORNING POST
