Hormuz Reopening may Ease Asia’s Energy Crisis, but Economic Damage
Could Last Months
For months, Asia has
suffered a physical supply crunch that will likely drag on its economies long
after the crucial waterway reopens.
A
possible reopening of the Strait of Hormuz would bring important relief to
Asian economies, but analysts warn that inflation, supply-chain disruptions,
and slower growth may continue well beyond the immediate crisis.
·
More
than 80% of oil and LNG shipments through the Strait of Hormuz are destined for
Asian markets.
·
Countries
across Asia depend heavily on Middle Eastern energy supplies.
·
US
President Donald Trump announced an interim agreement with Iran to reopen the
Strait of Hormuz.
·
The
US also signaled the removal of its naval blockade on Iranian ports.
·
Hundreds
of stranded oil and gas tankers could resume shipments to Asia once the deal
takes effect.
·
Asian
stock markets rallied strongly after the announcement.
·
Benchmark
indexes in Japan and South Korea rose about 5%.
·
Lower
oil prices improved investor sentiment across the region.
·
Over
the past three months, Asian economies faced:
·
Falling
currencies
·
Rising
inflation
·
Fuel
shortages
·
Industrial
supply bottlenecks
·
Downgraded
growth forecasts
·
Countries
such as Pakistan, Vietnam, and the Philippines were especially vulnerable due
to dependence on imported energy.
·
The
Philippines declared a national energy emergency and imposed power-consumption
cuts.
·
Experts
say reopening the strait will not instantly normalize trade.
·
Ships
still need months to clear backlogs and complete voyages.
·
Insurance
concerns and fears of renewed conflict could slow recovery further.
·
LNG
prices in Asia are linked to oil prices with a 3–6 month lag.
·
Even
if crude oil prices fall now, higher gas prices may continue through the end of
the year.
·
Economists
warn that inflationary pressure has not yet fully passed through to consumers
and industries.
·
Five
Gulf exporters — Iran, Saudi Arabia, Qatar, UAE, and Bahrain — supply over
one-third of global urea fertilizer.
·
Disruptions
during the planting season in Southeast Asia could reduce crop yields later
this year.
·
Asian
Development Bank officials warned that prolonged disruption could create
serious food security risks.
·
Japan
and South Korea faced shortages of naphtha, a key petrochemical used in
plastics and packaging.
·
Other
shortages affected helium, LPG, cooking fuel, and medical imaging supplies.
·
Japanese
energy officials said some supply chains may take up to a year to fully
recover.
·
Japanese
Prime Minister Sanae Takaichi called the agreement a “major step toward a
resolution.”
·
Australia’s
leaders said restoring free navigation was essential for easing pressure on
energy prices and regional economies.
Reopening
the Strait of Hormuz could stabilize oil supplies and bring short-term relief
to Asia’s economies. However, months of disrupted trade have already caused
deep economic damage, including inflation, supply shortages, and weakened
growth. Experts warn that recovery will be gradual, and many of the crisis’s
effects may persist well into 2026.
[ABS News
Service/15.06.2026]
A potential U.S.-Iran agreement to reopen the Strait of Hormuz
would offer near-term relief for Asia, the region outside of the Middle East
that has borne the brunt of the economic fallout from the monthslong war. Even
so, the shock waves of the crisis are likely to ripple through the end of the
year, and possibly well beyond.
Over the past three-and-a-half months, currencies across Asia
have plummeted, inflation has surged, and supply-chain bottlenecks have begun to choke industrial production.
The disruptions trace back to Asia’s heavy reliance on energy
and other commodities that move through the Strait of Hormuz. More than
four-fifths of the petroleum and liquefied natural gas transiting the waterway
is typically bound for Asian markets.
On Sunday, President Trump said in a social media post that an
interim cease-fire agreement reached by Washington and Tehran would reopen the
strait, and that he had authorized “the immediate removal of the United States
Naval blockade” on Iranian ports. The deal is scheduled to be signed on Friday.
“Ships of the World, start your engines,” he wrote. “Let the oil
flow!”
If an agreement to reopen the strait holds, it will provide an
immediate reprieve, freeing hundreds of tankers laden with oil, gas, and fuel
byproducts to begin making the monthlong
journey back to Asian ports.
Still, industry experts and economists caution that because
trade flows have been disrupted for so long, global markets will need
considerable time to normalize — meaning elevated inflation and supply-chain
strains are likely to linger through the end of the year.
For Asia, “the good news is that once the strait opens, oil and
some gas come back,” said Joshua Ngu, vice chairman of Asia Pacific at the
energy consultancy Wood Mackenzie. The bad news, he added, is that over the
past three-plus months, “every day the strait has remained closed, the economic
disruptions have grown exponentially and bled further down the supply chain.”
Those disruptions, Mr. Ngu said, “won’t be solved in a short
period of time.”
In Asia on Monday, country leaders celebrated the cease-fire
deal. Markets across the region rallied, with benchmark stock indexes in Japan
and South Korea both climbing around 5 percent.
Japan’s prime minister, Sanae Takaichi, wrote on X that the
agreement was a “major step toward a resolution.” She also said she hoped that
“free and safe navigation in the Strait of Hormuz will actually be ensured.”
In a joint statement, Australia’s prime minister, Anthony
Albanese, and foreign minister, Penny Wong, said they were pleased that the
agreement included steps toward reopening the strait and restoring freedom of
navigation.
“While full recovery will take time, restoring this vital trade
corridor is essential to easing pressure on energy prices and economies,
including in our region,” the statement said.
While Western nations have largely experienced the crisis at the
gas pump and through higher jet fuel prices, Asia has been grappling with an
acute physical supply shortage for months. Throughout developing Asia, economic
growth forecasts have been downgraded as shortages of crude oil and natural gas force countries to ration power.
A return to safe shipping lanes would brighten the outlook
significantly for countries heavily dependent on Middle Eastern energy,
including Pakistan, Vietnam, and the Philippines — the last of which has declared a national energy emergency and ordered mandatory consumption
cuts.
Wealthier economies, including Japan and South Korea, have
leaned on their deep pockets and strategic reserves to cushion the initial
blow. Even these industrial powerhouses, however, have struggled with soaring
oil prices that have weighed on their currencies, and with supply disruptions that only a
resumption of trade flows can begin to alleviate.
Economists worry that these pressures will outlast the immediate
geopolitical crisis. The turnaround time alone — for ships to clear the strait,
reach their final destinations, and return — will take months, a timeline that
could easily slip if fears of renewed Iranian aggression or a lack of insurance
coverage keep vessels away.
Inflationary pressures tied to disruptions in the flow of oil,
gas, and their byproducts are also likely to prove sticky. Liquefied natural
gas prices in Asia, for example, are typically indexed to oil prices and
operate with a three- to six-month price lag. This means that even if oil
prices come down in June, elevated natural gas prices are likely to persist
through the end of the year.
“From a price increase perspective, we’ve not even necessarily
seen that play through fully,” said Wood Mackenzie’s Mr. Ngu. In gas markets,
“the $100 oil price that we saw in March will only fully come through three to
six months from then,” he said. As a result, “we are still in a very precarious
time.”
Supply-chain snarls are poised to drag on as well.
One of the conflict’s biggest economic casualties has been the
global fertilizer supply. Five major exporters — Iran, Saudi Arabia, Qatar, the
United Arab Emirates and Bahrain — collectively supply more than one-third of
the world’s stocks of urea, the dominant form of nitrogen fertilizer. The
disruption has already cut into the peak planting season across much of
Southeast Asia, which runs from May to July.
“A disruption of a month or so is manageable, but if it bleeds
far into the planting season, the reduction in crop yields raises serious food
security issues,” said Albert Park, chief economist at the Asian Development
Bank. “The impact will be delayed, meaning we likely won’t see the brunt of the
production shortfalls until later in the year.”
Elsewhere, businesses in Japan and South Korea have been
contending with a shortage
of naphtha, a petrochemical byproduct of
crude oil refining used in plastic wrap and food packaging. Limited supply of
other commodities, including helium and liquefied petroleum gas, has strained everything from cooking to medical imaging.
For naphtha, restoring supply chains to normal will likely take
at least a year after Middle Eastern shipments resume, said Haruhiko Sakaino,
an adviser to Japan’s Agency for Natural Resources and Energy. The hurdles
start with small businesses that must scramble to ramp production back up. “It
won’t be as simple as resuming imports,” he said.
“It’s like capillaries that have been destroyed. They take a
long time to recover,” Mr. Sakaino said.