Asia-Pacific Faces Fresh Energy Shock as Hormuz Disruptions Drive Oil and Freight Costs Higher

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A fresh assessment of the fallout from the Middle East conflict says the economic shock is intensifying across Asia and the Pacific as maritime and insurance disruptions push energy and freight costs sharply higher. A new analysis by Albert Park and Matteo Lanzafame shows vessel traffic through the Strait of Hormuz has plunged as shipping companies and traders reassess security risks, driving up insurance premiums and freight rates for crude shipments to Asia — and contributing to a surge in global energy prices.

The Strait of Hormuz remains critical: roughly 20 percent of globally traded crude oil and liquefied natural gas moves through the narrow waterway, and about 80 percent of that traffic ultimately heads to Asian markets. Park and Lanzafame report that the drop in transits has materially tightened transport capacity, with freight rates for Middle East-to-Asia crude moving markedly higher and insurers charging elevated war-risk and rerouting premiums. Those transport-cost increases compound the direct price shock to oil and gas markets: Brent crude jumped roughly 45 percent between 28 February and 9 March 2026, and natural gas prices spiked sharply over the same period.

The implications for the region are uneven but serious. The People’s Republic of China — the world’s largest oil importer at about 11 million barrels per day — remains the single largest demand-side exposure, but smaller, import-dependent economies face acute macroeconomic strain. The analysis highlights Pakistan, Sri Lanka and Thailand as particularly vulnerable because of their heavy reliance on imported energy and higher sensitivity to swings in global fuel costs. Tourism-dependent economies such as the Maldives and Sri Lanka face additional risk if aviation disruptions persist: airspace closures and airline rerouting already underway could dampen tourist arrivals and increase air-cargo costs.

Financial channels will amplify the shock. Periods of heightened geopolitical risk typically push investors into safe-haven assets and strengthen the US dollar — an outcome that raises the local-currency cost of dollar-priced oil imports and tightens financial conditions for emerging markets. Park and Lanzafame note that several Asian economies have net oil and gas imports equal to more than 2 percent of GDP, meaning even moderate price increases can translate into sizeable economic losses through lower household purchasing power, higher production and transport costs for businesses, and tougher conditions for fiscal and monetary policy.

Availability of emergency oil stocks will be a key determinant of near-term resilience. The report notes that Japan, the Republic of Korea and the PRC hold several months’ worth of Strategic Petroleum Reserves, while India’s reserves are somewhat smaller — a factor that could shape how long countries can blunt the immediate hit from supply disruption. Policymakers across the Pacific have already begun contingency planning: earlier reporting showed the Cook Islands government ordering heightened fuel-security measures and Fiji’s consumer watchdog warning of likely domestic fuel and food-price effects as global prices rise.

As the situation evolves, the analysis underscores that supply-chain frictions and elevated shipping costs — not just crude-production outages — are now central to the regional economic risk. Governments and central banks will be monitoring freight and insurance markets alongside oil benchmarks as they weigh responses to inflationary pressures and currency moves. For many small island and emerging economies in the Asia–Pacific, the near-term test will be managing rising energy and transport bills while safeguarding external buffers and tourism-dependent revenues.