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Countries See Energy Triage in Iran War03/17 06:19
BANGKOK (AP) -- The escalating war with Iran is pushing parts of the world
into energy triage, forcing governments to choose where to cut demand or absorb
costs, while prioritizing dwindling supplies.
Asia is the most exposed since it relies heavily on imported fuel, much of
it shipped through the now-blockedStrait of Hormuz. The narrow passage offshore
from Iran is the main route for shipping a fifth of global trade in crude oil
and liquified natural gas.
Governments in the region are scrambling to adjust -- tallying oil reserves,
conserving energy, competing for supplies and trying to blunt prices. That
brings difficult trade-offs: saving power may slow business activity.
Prioritizing cooking gas for households can hurt restaurants and other
businesses.
"Even relatively modest constraints on energy use can create a drag on
industrial activity," said Linh Nguyen, with the consultancy Control Risks. She
pointed to Vietnam's energy-intensive export industries and warned that higher
fuel costs or conservation measures could quickly raise production costs or
slow factory output.
Analysts warn the same hard choices could soon spread beyond Asia to
fuel-importing economies in Africa and elsewhere as countries compete for
scarce supplies.
"The situation is common across the board," said Putra Adhiguna of the
Jakarta-based Energy Shift Institute. "There is no easy decision for the short
term."
Southeast Asia is rationing scarce energy
With oil prices surging despite releases of some reserves, Southeast Asia is
stretching dwindling energy reserves by urging households, businesses and
government agencies to slash power use.
In the Philippines, officials have switched to a four-day workweek to cut
back on fuel consumption and reduce the government's energy use by a fifth.
Office have been told to switch off computers during lunch breaks and keep air
conditioning no lower than 24C (75F). Vietnam has urged people to work from
home. While in Thailand, the prime minister has even asked officials to take
the stairs instead of elevators.
But this comes at a cost.
Dieu Linh, a vegetable seller in Hanoi, said even a 10% rise in fuel costs
will eat into her thin margins. "If my costs go up by even a little, the profit
is almost gone," she said.
At the same time, countries in the region are competing for limited supplies
at higher costs.
Vietnam has asked refineries and fuel distributors to keep fuel supplies
high, while Thailand is stretching its roughly two-month oil reserve and
seeking other domestic energy sources. Both are using price supports to shield
households from rising costs.
Thailand halted exports to protect its limited reserves, contributing to
shortages that have closed nearly a third of Cambodia's roughly 6,000 gas
stations.
East Asia searches for new energy suppliers and sources
More than 80% of the liquefied natural gas, or LNG, that passed the Strait
of Hormuz in 2024 went to Asia, according to the U.S. Energy Information
Administration, and much of it to Japan, South Korea and Taiwan.
Japan's first line of defense is its vast strategic oil stockpile, amounting
to around 254 days' worth of supplies. This system was set up after the shocks
from the 1970s Arab oil crisis.
Japan began releasing about 45 days' worth of oil reserves this week to
prevent fuel prices from surging as crude oil imports slow. It last released
reserves after Russia's invasion of Ukraine in 2022.
This will help keep Japan's energy-intensive industries running, from
automobiles to steel manufacturing and heavy machinery. Companies like Toyota,
Mitsubishi and Nippon Steel depend on steady fuel supplies.
South Korea plans to release 22.46 million barrels from its reserves under
the International Energy Agency 's largest-ever coordinated stock draw.
But analysts said that tapping reserves isn't a longterm solution.
It will give refineries "some buffer" against disruptions. But this does not
increase a country's overall supply unless it can buy oil released by other
nations, said Muyu Xu of the energy consultancy Kpler.
If the crisis drags on, crude oil shortages could return. The releases may
keep refineries running for another few weeks, but companies may need to slow
production if disruptions continue, she added.
"The fundamental difficulties will not be solved by this action," said Mika
Ohbayashi of the Renewable Energy Institute in Japan, adding that renewable
energy was a long-term solution but the Japanese government was uninterested.
Japanese Prime Minister Sanae Takaichi is due to meet with U.S. President
Donald Trump later this month and Japan's plans to buy more American LNG and
restart nuclear power plants are likely to be on the agenda, analysts say.
Populous nations prioritize homes, but face price pinch
India is prioritizing household needs for its limited supply of liquefied
petroleum gas or LPG, which is used for cooking and to power cars.
It has absorbed more than half of the increase driven by global market
disruptions under a federal scheme to keep prices low for poor households, said
Indian Petroleum Minister Hardeep Singh Puri.
But shortages are already seeping into restaurants and hotels in the world's
second-largest LPG importer, as eateries shorten hours, close temporarily or
trim long-simmered curries and deep-fried snacks from their menus.
The scale of demand in India, the world's most populous nation, limits how
long it can cap prices to shield consumers. The situation could worsen within a
week if government subsidies lapse, said Duttatreya Das of the think tank
Ember, noting gas supplies were the most immediate concern.
"You can't store a lot of gas," Das said, adding that fertilizer factories
and small industries will feel the pinch first.
Indonesia, a country of 287 million people and Southeast Asia's most
populous nation, also faces hard choices.
While the government has promised to maintain fuel prices throughout Eid
al-Fitr, the Muslim holiday marking the end of the fasting month of Ramadan,
Adhiguna of the Energy Shift Institute said there is "no clarity about what
will happen after that," adding that this implies fuel prices could increase.
Thailand is also caught in a dilemma. If it ends subsidies that keep prices
low, living costs will jump and that could spark a panic if reserves fall
further, said Areeporn Asawinpongphan of the Thailand Development Research
Institute.
If the conflict continues, Indonesia will have to choose between keeping the
subsides that protect customers or cutting funding to keep to budgetary limits.
However, this could fuel inflation. Given Indonesia's limited 20-day reserve,
Adhiguna warned that price fluctuations in Indonesia's fuel market will be
swift.
"It will eventually reach a breaking point," Adhiguna said.
Europe feels the squeeze, too
The European Union is doubling down on its long-term clean energy strategy
to cut consumption and rein in prices across the 27-nation bloc that have risen
sharply since the war's start. Officials met in Brussel this week, where they
considered ways to improve the region's energy security.
"We are looking at how we can reduce people's energy bills," said European
Commissioner for Energy Dan Jorgensen. "We are working on immediate measures to
help businesses and our most vulnerable citizens."
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