Why Southeast Asian nations are vulnerable to the fuel crisis as Iran war rages on

Daniel Gech looks at prices on a board at a Sokimex petrol station in Phnom Penh and winces. Four weeks into the war in the Middle East, the ripple effects of a faraway conflict are beginning to threaten the Cambodian teenager’s ability to earn and learn. The 16-year-old uses his moped to travel between his home and school, and for his work in the evening. It now costs him an extra US$2 a day to fill up his tank – or US$14 a week – and the price is rising, a significant surge in a country where the average wage is just over US$10 a day. “The prices started to go up immediately after the war started,” he said, as he made a QR payment on Sunday morning for a litre of fuel that cost 5,400 Cambodian riel (US$1.34), 2,000 riel higher than before the war. “It’s too much already, and it’s getting worse each day.” Southeast Asia is dangerously exposed to the throttling of the Strait of Hormuz by Iran, which has weaponised global energy supply in an asymmetrical response to the devastating military assaults by the US and Israel. The combatants have made shrill threats to target energy facilities across the Gulf as the war rages on into its fourth week. The price of Brent crude has oscillated between US$100 and US$110 per barrel in recent weeks, or 20 per cent higher than before Israeli and American jets began bombing Iran on February 28. On Monday, President Donald Trump said the US would halt military strikes on Iranian power plants for five days after talks with Tehran. But the crude supply crunch has already been developing into a full-blown crisis for Southeast Asia. Sokimex, a major Cambodian supplier, said on Monday it would stop selling liquefied petroleum gas (LPG) from April 1 as it could no longer meet market demand, with the conflict making it impossible to import the product since the beginning of March. Cambodian Energy Minister Keo Rottanak later moved to reassure the public, saying Sokimex only provided 3 per cent of the nation’s LPG in a move to smother fears of a looming shortage, which could spur more runs on petrol stations. Like other regional countries, Cambodia is scouring for new oil and gas contracts. But eye-watering high energy prices as a result of extended sea journeys from Europe and the US to Asia, due to Iran’s chokehold in the Strait of Hormuz affecting Gulf supplies, are already being passed on to consumers. The poorest and least connected countries in the Mekong region, Myanmar and Laos, are facing some of the sharpest challenges. Myanmar has already tried to limit the number of cars on the roads while ordering civil servants to work remotely on some days this week. In Laos, drivers are facing several hours of queues to buy half a tank of gas at elevated prices. The government has declared a three-day school week to reduce pressure on fuel supplies, a large proportion of which is imported from Thailand, which has promised to keep the oil flowing. “The situation is really dire in Luang Prabang,” tour driver Chantee Sipaseuth said from the northern tourism hub. “It’s also cash payments only now, so while I wait for five hours a day, I have to ask my wife to bring me cash and food to pay for the fuel.” Over the weekend, petrol prices in Vietnam surged by 20 per cent as the government warned of oil and gas shortages that could threaten the country’s transport and crucial manufacturing sector. Aviation authorities in Hanoi have warned airlines that they may have to cut flights from April, as deliveries of jet fuel next month are no longer guaranteed. Jet fuel has surged from US$85 to US$90 a barrel to US$150 to US$200 in recent weeks, hammering a sector where fuel is a big chunk of operating costs. Thai Airways, the kingdom’s national flag carrier, has warned it could be forced to raise fares by 10 per cent to 15 per cent. For countries with a huge tourism sector like Thailand, Laos, Cambodia and Vietnam, the spillover effects across the economy could be felt for months even if the war were to end swiftly, and tourists may continue to hold off bookings, travel industry experts have warned. Thailand assures it has 100 days or more of fuel, a level deemed as ample, provided the Middle East conflict eases soon. But its government is still spending tens of millions of dollars a day to subsidise fuel prices and support fertiliser prices to protect farmers, as the two commodities are mostly shipped through the Strait of Hormuz. Prime Minister Anutin Charnvirakul has warned hoarders and price gougers of severe punishment if they are caught artificially jacking up fuel prices. Still, a supply crunch is causing some petrol stations to shut down and hard-hit fishers to keep their boats docked as they are unable to afford the diesel to be out at sea. Bangkok has said the demand spike is causing distribution bottlenecks, which would ease if panic buying stops. Supply-demand pressures in the energy market have inevitably led to a jump in prices of other products in Thailand, from detergent to seafood. For Sakol Insangnoen, a driver in Bangkok working for ride-hailing platform Grab, it is getting harder to cope day by day. “I’ve been having to plan much ahead to make sure I fill the tank early before there are queues, and I have to turn down many destinations because it's not worth it to go far with uncertainty over fuel,” he said. “Some drivers are stopping because Grab still takes a cut from us even though our costs are higher.”

Why Southeast Asian nations are vulnerable to the fuel crisis as Iran war rages on

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}From Laos to Thailand, long queues are forming at petrol stations while residents are reeling from surging fuel prices

From Laos to Thailand, long queues are forming at petrol stations while residents are reeling from surging fuel prices