Iran Conflict Disrupts Asia Energy Markets, Strains Households and Industries

The Iran war’s focus on the Strait of Hormuz has sent shockwaves through Asia’s energy markets, threatening households and industries reliant on imported oil and gas. The Strait, a vital conduit for roughly 20% of the world’s oil—80% of which flows to Asia—remains partially closed as Tehran tightens its grip on critical infrastructure.

India Faces Immediate Impact

India, the world’s third-largest oil importer, has been hit hard. Nearly 90% of its crude oil and half of its natural gas are imported, with over 40% of its oil shipments passing through the Strait of Hormuz. Prime Minister Narendra Modi emphasized the strait’s global importance in a recent call with former U.S. President Donald Trump, stating, 'Ensuring that the Strait of Hormuz remains open, secure, and accessible is essential for the whole world.'

Despite some tankers successfully transiting the strait, public access to energy remains strained. Reliance Industries, operator of the world’s largest refinery, reportedly purchased 5 million barrels of Iranian oil—India’s first such deal since 2019—following a temporary U.S. sanctions waiver. Meanwhile, businesses and households are bearing the brunt. AD Singh, founder of India’s Olive Group of restaurants, noted, 'All our kitchens run on gas, and they’ve all been hit. We’ve been forced to shorten menus and adapt, but livelihoods are at stake.'

Japan and South Korea Tap Reserves

Japan and South Korea, two of Asia’s most advanced economies, are also feeling the strain. Japan, which imports over 90% of its oil from the region, has begun tapping strategic reserves. South Korea is considering similar measures and evaluating emergency support packages. While both nations have financial buffers to cushion the immediate impact, structural risks persist.

The crisis has prompted a return to coal and firewood in several countries, with induction cooking equipment selling out as liquefied petroleum gas (LPG) supplies dwindle. Online rumors and panic buying have exacerbated the situation, leading to police deployments at gas stations in India.

‘Ensuring that the Strait of Hormuz remains open, secure, and accessible is essential for the whole world.’ — Indian Prime Minister Narendra Modi

The energy crunch underscores Asia’s vulnerability to disruptions in global oil flows, raising concerns about long-term stability and the need for diversified energy strategies.