South Korea will cap petroleum product prices as Asian nations grapple with a deepening fuel crisis triggered by disruptions to Middle Eastern oil supplies. The move, announced Monday by President Lee Jae Myung, comes as governments across the region implement emergency measures to conserve fuel and mitigate the economic impact of soaring prices.
The crisis stems from constraints on maritime traffic through the Strait of Hormuz, a vital artery for oil exports from the Middle East. Japan and South Korea are particularly vulnerable, sourcing 90% and 70% of their oil from the region, respectively. Around 1.7 million barrels of Korea-bound oil have been held back daily due to the ongoing conflict, according to presidential policy advisor Kim Yong-beom.
Beyond price controls, a range of austerity measures are being rolled out. Thailand has ordered civil servants to use stairs instead of elevators and work from home, while also increasing air conditioning temperatures to 27 degrees Celsius and encouraging employees to forgo suits for short-sleeved shirts. Vietnam is urging businesses to adopt work-from-home policies to reduce transportation needs. The Philippines is considering a four-day work week and limiting official travel to essential functions.
South Asia is also feeling the strain. Bangladesh has accelerated the Eid-al-fitr holiday, leading to early closures of universities in an effort to save fuel. Pakistan has implemented a four-day work week for government offices and shuttered schools. India has suspended liquefied petroleum gas shipments to commercial operators, prioritizing household supplies, a move that has raised concerns among hotels and restaurants.
Indonesia’s finance minister announced Monday that the country will allocate 381.3 trillion rupiah ($22.6 billion) for energy subsidies to maintain affordable fuel and electricity prices. Thailand plans to freeze cooking gas prices until May and promote alternative energy sources like biodiesel and benzene. Vietnam is exploring the removal of tariffs on fuel imports.
Oil prices have experienced significant volatility in recent days. WTI crude surged above $115 per barrel on Monday before fluctuating amid conflicting statements from Washington. As of Wednesday evening, WTI Crude is trading above $90 per barrel.
The International Energy Agency’s 32 member countries unanimously agreed on March 11 to release 400 million barrels of oil from their emergency reserves. Despite this coordinated effort, flows from the Middle East remain constricted. Wood Mackenzie analyst Simon Flowers cautioned in a research note that the current situation could prove more severe than the 2022 Russia/Ukraine crisis, noting that the volume of supply at risk is dimensionally bigger and real. Flowers suggested that $200 per barrel is “not outside the realms of possibility” in 2026.
Japan’s industry minister, Ryosei Akazawa, stated Wednesday that the country will consider tapping into its national oil reserves and “capture all possible measures to ensure stable supplies of energy.”
