How Asian Countries are Responding to the Oil Shock
The surge in oil prices triggered by the U.S.–Israeli war with Iran has pushed Asian governments to take emergency steps to shield their economies. The region is particularly vulnerable because many countries rely heavily on crude shipped through the Strait of Hormuz, which has been effectively closed since the conflict escalated.
With fears that energy shortages could fuel inflation and slow economic growth, governments across Asia are deploying a mix of strategic reserves, subsidies, rationing and alternative energy policies.
Japan taps strategic oil reserves
Japan has pledged to release a record 80 million barrels from its national oil reserves, equivalent to roughly 45 days of supply.
Tokyo has also asked Australia, its largest supplier of liquefied natural gas, to increase output to help offset the energy shock.
South Korea boosts coal and nuclear power
South Korea is shifting its energy mix to reduce reliance on imported oil.
The government plans to raise the utilisation rate of nuclear power plants to about 80% and temporarily lift limits on coal-fired power generation. Authorities have also introduced a cap on domestic fuel prices the first such measure in nearly three decades and are considering energy vouchers to support vulnerable households.
China blocks fuel exports to protect domestic supply
China has moved to protect domestic energy availability by imposing a temporary ban on exports of refined fuels including gasoline, diesel and jet fuel.
The measure is designed to prevent shortages at home as global markets tighten.
India seeks shipping access through Hormuz
India is attempting to secure safe passage for ships trapped near the Hormuz chokepoint. Iran has allowed a small number of Indian vessels to pass through the blockade.
The disruption has created one of India’s most severe gas shortages in decades, prompting authorities to cut liquefied petroleum gas (LPG) supplies for industry so households have sufficient cooking fuel.
Indonesia expands fuel subsidies
Indonesia plans to increase spending on fuel subsidies to keep domestic prices stable.
Jakarta is also accelerating its B50 biodiesel programme, which blends 50% palm-oil biodiesel with conventional diesel to reduce dependence on imported petroleum.
Vietnam taps price stabilisation funds
Vietnam has used its fuel price stabilisation fund to curb increases in domestic oil prices.
The government has instructed banks to provide financing to fuel traders so they can purchase additional supplies. Authorities are also considering expanding national petroleum reserves and have warned airlines to prepare for possible flight reductions as jet fuel imports decline.
Sri Lanka introduces fuel rationing
Sri Lanka has implemented fuel rationing to extend existing supplies.
Motorcycles are now limited to five litres of fuel per week, cars to 15 litres and buses to 60 litres. The government says current shipments will cover national demand until the end of April.
Bangladesh pauses rationing for holiday travel
Bangladesh temporarily suspended fuel rationing to allow smooth travel ahead of the Eid holiday period.
Authorities are simultaneously trying to secure additional fuel shipments from India, China and other partners to avoid shortages.
Nepal raises fuel prices
Nepal has raised petrol and diesel prices sharply to cope with rising import costs.
The state-run Nepal Oil Corporation said the increase was necessary to ensure timely payments to Indian Oil Corporation and maintain supply flows. Nepal is heavily dependent on imports for all its fuel needs.
Thailand and Philippines explore Russian oil
Thailand and the Philippines are exploring the possibility of purchasing oil from Russia to diversify supply sources.
Thailand also plans to freeze cooking gas prices and promote biodiesel usage through subsidies. The Philippines has introduced a four-day workweek for some government offices as a measure to reduce energy consumption.
Analysis: Asia scrambles for short-term energy solutions
The diverse measures adopted across Asia highlight the region’s vulnerability to disruptions in Middle Eastern energy supplies. Many Asian economies rely heavily on imported oil, making them particularly exposed to price spikes and supply interruptions.
Governments are therefore pursuing a mix of short-term and structural responses. Immediate actions—such as releasing reserves, imposing price caps or rationing fuel aim to prevent sudden economic shocks and protect households from inflation.
At the same time, some countries are accelerating longer-term strategies, including expanding nuclear power, boosting biofuel production and diversifying import sources.
However, if the disruption to Gulf energy flows persists, these measures may only partially cushion the impact. Sustained high oil prices could slow economic growth across the region, forcing governments to balance energy security with fiscal stability as they attempt to navigate the crisis.
With information from Reuters.