Asia is bracing for a second wave of energy shocks as the Iran war continues, severely impacting the region's economies.
Initial government responses to the crisis included rationing energy and prioritizing household needs, but these measures are now proving inadequate.
With the Strait of Hormuz closed for an extended period, energy supplies to Asia have dwindled, causing airfare, shipping rates, and utility bills to surge.
The United Nations Development Program warns that around 8.8 million people in Asia could fall into poverty, with estimated economic losses reaching $299 billion.
The countries with the least resources to respond, or the consumers who can least afford to pay, are the ones who feel everything first.
Samantha Gross, Brookings Institution
Asian governments initially based their budgets on an oil price of $70 per barrel, but the war has driven Brent crude to about $120 per barrel.
This situation forces governments to choose between maintaining costly subsidies or passing the increased costs onto consumers, risking public discontent.
In India, the government redirected fuel towards cooking gas, impacting fertilizer supplies and raising prices amid concerns of weak rainfall.
Prime Minister Narendra Modi has urged citizens to conserve fuel and shift to local products as subsidies strain the economy.
The Philippines has implemented a four-day work week to save fuel and provided targeted subsidies, but many consumers still face higher energy costs.
Thailand has lifted its diesel price cap, leading to increased spending cuts to manage the rising oil prices.
Vietnam's tourism sector is suffering as jet fuel shortages force flight reductions, impacting an industry that constitutes nearly 8% of its GDP.
Countries like Pakistan and Bangladesh are grappling with high market prices for oil, further straining their economies and foreign reserves.
Experts warn that once subsidies are depleted, inflation may escalate, creating a fiscal crisis for many nations.
The end of the war is unlikely to provide immediate relief, as the global oil and gas trade will take time to recover.
As Southeast Asia faces the brunt of the crisis, experts predict that the energy shock will force significant changes in the region's economies.
Countries are exploring long-term solutions, including diversifying energy sources and investing in renewables to mitigate future risks.
The ongoing conflict is reshaping geopolitical considerations in Southeast Asia and hindering regional growth prospects.
The longer it lasts, the larger those negative effects would be.
Albert Park, Asian Development Bank