Asia faces deepening energy crisis as war disrupts oil supplies

Governments across Asia expected the war to end quickly. They made short-term choices: cutting power use, rationing fuel for fertilizer, and tapping stockpiles. None of those moves were designed to last months. The conflict has not ended, and the energy crisis is now spreading through entire economies.

Oil prices have climbed sharply. Brent crude reached about $120 a barrel during the war. Most Asian governments had budgeted for oil at around $70 a barrel. That gap is costing them billions. Airline tickets, shipping fees and utility bills are all rising.

The human cost is mounting. The United Nations Development Program estimates 8.8 million people face the risk of falling into poverty. The conflict may cause $299 billion in economic losses across the Asia-Pacific region. "The countries with the least resources to respond, or the consumers who can least afford to pay, are the ones who feel everything first," said Samantha Gross of the Brookings Institution.

India shifted fuel supplies to cooking gas for roughly 330 million households. This move cut into fertilizer supplies. Higher fertilizer costs, combined with forecasts of weak rainfall this year, threaten India's rice exports. On Sunday, Prime Minister Narendra Modi urged citizens to buy locally, cut travel abroad and work from home to save fuel. He also asked farmers to halve their fertilizer use.

Thailand ended its diesel price cap after less than a month. Fuel subsidies ran out. The government is now cutting other spending to manage higher oil prices. The Philippines moved to a four-day work week to save fuel and introduced targeted subsidies for poor households. Yet Fitch Ratings found most consumers are still paying more for energy, slowing business activity in cities like Manila.

Vietnam suspended fuel taxes to ease domestic prices. Jet fuel shortages have forced flight cuts. Tourism accounts for nearly 8% of Vietnam's gross domestic product. Hanoi tour guide Nguyen Manh Thang said, "Business is not good right now. There are already fewer tourists."

Poorer countries face a different trap. Pakistan and Bangladesh must buy oil and gas at current market prices, which are higher and more volatile than long-term contracts. This pushes up import costs and strains their foreign exchange reserves. Ahmad Rafdi Endut, an independent energy analyst in Kuala Lumpur, explained the dilemma facing all governments: maintain expensive subsidies and strain public finances, or cut subsidies and anger voters as costs rise. Once subsidies run out and inflation climbs, countries risk what Endut called a "fiscal time bomb."

The war's end will not bring quick relief. Global oil and gas trade will not bounce back immediately. Restarting production, repairing infrastructure and shipping fuel from the Middle East to Asia will take weeks or months. Europe will face similar delays, but with about a four-week lag behind Asia. Henning Gloystein of the Eurasia Group said Southeast Asia is currently the "biggest pain point" globally. "This fuel shortage situation is going to get worse," he said.

The crisis is spreading beyond Asia. Africa faces higher energy and import costs, widening deficits and driving up inflation. Latin America and the Caribbean are also slowing. Ted Krantz, chief executive of supply chain risk firm Interos.ai, warned the complex disruptions across global supply chains will have broader impacts.

Maria Monica Wihardja of the ISEAS-Yusof Ishak Institute in Singapore noted the crisis exposes how fragile Asia's growing middle class is. Many people risk slipping back into poverty. The energy shock will reshape Southeast Asia's economies, including shifts in job markets and how countries prepare for future energy crises.

Some governments are already pursuing longer-term solutions. They are diversifying fossil fuel suppliers, developing nuclear energy and expanding renewables like solar. Albert Park of the Asian Development Bank said the war is making geopolitical risk central to Southeast Asia's economic outlook and directly slowing regional growth. "The longer it lasts, the larger those negative effects would be," he said.