Indo-Pacific Energy Markets Navigate Protracted Iran War Disruptions
Four weeks into the Iran war and closure of the Strait of Hormuz, the energy crisis across Asia has entered a more complex and uncertain phase. The Indo-Pacific is now grappling with a sustained price shock driven by elevated geopolitical risk premiums and supply chain reconfiguration, with some countries facing acute physical supply shortages.
Governments were initially more concerned about price volatility than outright shortages, as noted in BGA’s regional energy update from March 9. This dynamic has since intensified, with fuel prices across Asia continuing to climb and increasingly diverging across markets depending on subsidy regimes, currency strength and policy interventions. Benchmark comparisons show Southeast Asian retail fuel prices rising unevenly, with more interventionist markets such as Indonesia and Thailand cushioning consumers, while more liberalized markets such as Singapore pass through price increases more directly.
At the same time, the geopolitical outlook remains highly fluid. The Iran war has become increasingly unpredictable, with signals of potential backchannel engagement by U.S. President Donald Trump suggesting a search for deescalation, but with both sides still far apart.
Oil prices are unlikely to return to pre-war levels anytime soon. The war has inflicted significant damage to oil infrastructure in the Middle East and has temporarily halted hydrocarbon production and processing facilities there, resulting in supply disruptions that will last months.
For Asian governments and businesses, decision-makers have shifted their focus from reactive crisis management to scenario planning for a multi-month energy disruption, particularly as risks to oil and gas flows and shipping routes persist.
Across the Indo-Pacific, three key trends have emerged. First, governments are escalating intervention measures to manage domestic price pressures and preempt political fallout. Notably, the Philippines has become the first country to declare an energy emergency, highlighting heightened concern about the government’s ability to maintain supply and manage prices.
Second, supply chain nationalism is intensifying, with some countries imposing export restrictions and domestic prioritization measures while others are looking to diversify their energy imports away from the Middle East. Thailand and China, for example, have halted crude exports, contributing to the further fragmentation of regional energy markets.
Third, fiscal pressure is mounting, particularly in subsidy-heavy economies, as governments face the trade-off between protecting consumers and maintaining budgetary discipline.
Looking ahead, short- to medium-term volatility is expected to continue. Even in the absence of a full physical supply disruption, sustained oil prices in the $90-$110 per barrel range would likely feed into transportation, manufacturing and electricity costs across the region, with lag effects differing by market. Policy responses are expected to broaden from short-term price smoothing and tax relief toward more interventionist tools, such as export controls, strategic reserve releases and demand management. At the same time, political sensitivity around fuel prices is rising, particularly in emerging Southeast Asian markets, increasing the risk of public dissatisfaction and policy unpredictability.
BGA assesses that countries with high levels of exposure to hydrocarbon supply from the Middle East, limited government intervention in the energy market and constrained fiscal space will be hardest hit in situations where a supply crunch leads to competitive bidding for hydrocarbon procurement. In this context, the key question for global executives is how prolonged and politically consequential that shock will be.
This report presents BGA’s on-the-ground market analysis, drawing on insights from BGA teams across the region. It also reflects evolving government sentiment and public reactions, which we continue to monitor closely as the situation develops.
If you have questions or comments, please contact BGA Director of Energy, Climate and Resources (ECR) Chayamon Srisongkram or BGA Director of ECR Mardika Parama.
For additional context on how the Iran war is reverberating through Indo‑Pacific energy markets — and why it matters for governments and global executives — listen to this recent episode of “Why Should We Care About the Indo‑Pacific?,” a BGA‑sponsored podcast focused on the region’s most consequential geopolitical and economic shifts.
China
- The government views the energy disruption as manageable and is focused on reinforcing a narrative of stability and control.
- It has adopted a strategy of selective intervention, including adjustments to retail fuel prices, directives to state-owned companies to stabilize supply and increased market oversight.
- As a long-term policy response, the government plans to pursue diversification, investment in new energy and infrastructure and enhanced bilateral diplomacy.
China’s response remains primarily externally focused, with diplomacy, not domestic intervention, at the center of its strategy. Official actions point to a limited but targeted domestic response, combined with a broader effort to frame energy security as part of long-term economic resilience. While market speculation around more aggressive interventions persists, Beijing has so far avoided publicly confirming large-scale emergency measures, signaling confidence in its buffer capacity and preference for controlled, incremental action.
China acknowledges its exposure to disruptions in the Strait of Hormuz but continues to frame the challenge as manageable and largely external. Public messaging emphasizes global responsibility for maintaining energy stability rather than highlighting domestic vulnerability. Notably, Beijing has not disclosed detailed data on supply disruptions or reserve usage, reinforcing a narrative of stability and control.
Domestic policy actions have been limited and calibrated. The primary confirmed intervention is an upward adjustment of retail fuel prices in line with global benchmarks, alongside directives to major state-owned energy companies to maintain production, ensure supply and stabilize distribution. Regulatory authorities have also been tasked with strengthening market oversight, particularly to prevent price manipulation.
At the same time, China’s most visible response has been diplomatic. Senior leadership has engaged in intensive outreach with key Middle East stakeholders, positioning China as a stabilizing actor while advocating for deescalation and the protection of energy transit routes. This diplomatic posture reflects a strategic choice to mitigate supply risks externally rather than rely on disruptive domestic controls.
China’s longer-term approach is anchored in structural energy security and diversification. The existing Energy Law provides the government with authority to direct production, manage distribution and mobilize strategic reserves if required. No such large-scale interventions have been publicly activated to date. More significantly, the government is using the crisis to reinforce its long-term transition agenda.
The 15th Five-Year Plan elevates energy security and “new energy” development as core components of national resilience, accelerating investment in domestic energy production, electrification and grid infrastructure. In parallel, China is strengthening diplomatic and regional coordination to secure supply routes and position itself as a reliable energy partner in Asia. This includes bilateral engagement with both suppliers and regional neighbors, rather than participation in multilateral security arrangements.
China is expected to maintain its dual track approach in limited domestic intervention combined with active external diplomacy while preserving flexibility to escalate policy tools if disruptions intensify.
India
- The government projects supply stability despite acute exposure, combining public reassurance with rapid operational measures to secure fuel and gas availability.
- It has pursued selective intervention focused on boosting domestic output, diversifying import sources and relying on state-run firms to absorb price pressure while limiting pass-through to consumers.
- Fiscal buffers, strategic reserves and diversification away from Hormuz-dependent routes form the core of India’s medium-term energy security response amid rising import costs.
India is navigating one of the most severe global energy supply shocks in recent history, with the government moving decisively to project stability while looking for alternatives. The Ministry of Petroleum and Natural Gas has categorically said that India’s petroleum and LPG supply situation is secure, with all retail fuel outlets operational and no rationing in place in the country.
The sharpest anxiety has centered on liquified petroleum gas (L) and liquefied natural gas (LNG). With roughly 90 percent of India’s seaborne LPG normally transiting the Strait of Hormuz, public concern escalated rapidly — driving cylinder demand to 8.9 million units per day before settling back to 5 million following government intervention. In response, domestic refinery LPG output has been ramped up by 40 percent to 50,000 metric tons per day, while 800,000 metric tons of assured inbound cargoes are already in route from the United States, Russia and Australia across India’s 22 import terminals. Asian LNG spot prices have surged from around $10 per 1 million British thermal units (MMBtu) to over $15 per MMBtu following QatarEnergy’s force majeure declaration on exports from Ras Laffan, Qatar.
On crude, Indian refineries are running at over 100 percent capacity, with supplies from 41-plus global sources compensating for the Hormuz disruptions. Total reserve cover currently stands at approximately 60 days. Brent crude touched $120 per barrel before easing to $92-$100, and with crude import dependence at 90 percent, each $1 increase adds approximately $2 billion to India’s annual import bill.
The rupee is at an all-time low against the dollar, and private retailer Nayara Energy has raised petrol and diesel prices, while state-run companies remain under political pressure to hold prices down. The International Energy Agency has ordered a record release of 400 million barrels from global emergency reserves. President Donald Trump’s extension of his Iran deadline to April 6 offers a narrow diplomatic window, but diversifying sources away from Hormuz-dependent routes and fiscal intervention through subsidies and tax adjustments remain likely tools if pressures persist.
Indonesia
- Fuel remains generally available, with only a small price increase, as the government absorbs a portion of the costs.
- The government has implemented a modest and selective short-term policy response, including a work-from-home policy, to reinforce a narrative of stability and control.
- The government has increased export taxes on coal and nickel to help plug the budget deficit and enable longer-term cost absorption.
Indonesia’s state-owned oil company Pertamina has begun to face challenges in acquiring hydrocarbon products but is still able to provide a steady energy supply to the market. Parts of Pertamina’s fuel and crude procurement tenders have been stalled following a sharp increase in international prices.
Fuel availability in Indonesia signals Pertamina’s willingness to procure at a premium price. There were reported shortages in several rural areas, but this was caused by panic buying, not a supply squeeze, and such cases are highly localized.
The public response has so far been muted, as subsidized fuel prices have remained unchanged. However, some experts and economists have raised concerns about the strain on the state budget from sustaining both populist programs and energy subsidies.
Unlike neighboring countries, Indonesia has pursued a short-term policy response that is modest and highly selective. The policies are aimed at reducing fuel consumption and improving Pertamina’s capacity to acquire hydrocarbons, although their efficacy remains to be seen.
To reduce fuel consumption, the government plans to implement a work-from-home policy for one day each week, which will be mandatory for civil servants and voluntary for the private sector.
Separately, Pertamina is also reportedly reviewing its tender-based procurement process to strengthen its ability to secure hydrocarbon supplies while maintaining corporate governance. The review aims to provide agility for the company to secure fuel during a highly competitive bidding period.
Indonesia’s longer-term response to the Iran war is centered on fiscal shock absorption. The government is looking to offset higher fuel and crude costs by raising revenue from commodity exports. With Newcastle coal prices reportedly rising to around $135 per ton, the government appears to have dropped its earlier plan to cut coal output by roughly 25 percent from last year’s level and is instead moving toward export duties, with the final rate yet to be determined.
The government is also pushing longer-term measures, including plans to develop 100 gigawatt of solar power and accelerate vehicle electrification. President Prabowo Subianto has instructed Minister for Energy and Mineral Resources Bahlil Lahadalia to establish an energy transition task force to help deliver these priorities.
Indonesia also plans to diversify its hydrocarbon source from the United States particularly for crude oil, fuel and liquefied petroleum gas (LPG). Jakarta’s reciprocal tariff agreement with Washington requires it to procure energy from the United States. Indonesia aims to leverage this deal to secure a steady supply. However, the agreement has not been ratified by Indonesia, and the details about procurement remain unclear.
Japan
- Japan holds substantial oil reserves (239 days total as of March 24), with phased releases already initiated in response to rising Middle East tensions. The government introduced emergency fuel subsidies March 11 to cap gasoline prices at around JPY 170 ($1.06) per liter, fully covering any increase above that level. The scheme began March 19 and may be extended if needed.
- To ease LNG demand, Japan will temporarily increase coal-fired power generation and has restarted nuclear capacity (Kashiwazaki-Kariwa Unit 6), potentially reducing LNG consumption, including its Hormuz-linked supply.
- Japan is accelerating its diversification of energy imports, prioritizing U.S. supply while exploring additional sources (including Central Asia, South America and Singapore), with both industry and shipping sectors supporting alternative procurement and transport routes.
Japan imports nearly all its fossil fuels, and more than 90 percent of its crude oil imports transited the Strait of Hormuz in 2025. By contrast, the country has diversified its LNG procurement, with only about 6 percent of imports passing through the strait.
Japan maintains oil reserves across three layers: private sector inventories, government stockpiles and joint reserves with oil-producing countries. With the flare-up of tensions in the Middle East, authorities executed staged releases of private reserves March 16, followed by government and joint reserves March 26. As of March 24, total reserves equaled 239 days of supply, including 87 days of private reserves, 146 days of government reserves and six days of joint reserves.
Prime Minister Sanae Takaichi warned March 11 that gasoline prices could exceed JPY 200 ($1.25) per liter due to the Iran-driven oil price surge. She has since introduced emergency subsidies to contain price increases. The government set a benchmark of approximately JPY 170 ($1.06) per liter — a rate below the prior national average of JPY 178 ($1.11) before her October 2025 inauguration — and committed to fully subsidizing prices above this level. The enhanced subsidy scheme took effect March 19. The government indicated it would adjust measures if price pressures persist.
Takaichi announced March 27 a one-year increase in coal-fired power use starting April 2026. In 2024, Japan’s power generation mix comprised nuclear (9 percent), coal (29 percent), natural gas (32 percent), oil (7 percent) and renewables (23 percent). This measure will reduce LNG consumption by approximately 500,000 tons annually. In addition, Unit 6 of Tokyo Electric Power Company’s Kashiwazaki-Kariwa Nuclear Power Plant resumed commercial operations in March. At full capacity, it could reduce LNG flows routed through the Strait of Hormuz by roughly 40 percent.
During a plenary session of the House of Councilors March 23, the prime minister reaffirmed supply diversification through proactive resource diplomacy and upstream investment in resource-rich countries. She highlighted expanded imports from the United States, including Alaska, and identified potential sourcing from Central Asia, South America and Singapore.
Industry leaders signaled alignment. Shunichi Kito of the Petroleum Association of Japan said refiners are exploring supply from North America and Latin America, including Ecuador, Colombia and Mexico. Hiroshi Nagasawa of the Japanese Shipowners’ Association confirmed government requests to secure transport from non-Hormuz routes and said the shipping sector will respond.
At the U.S.-Japan summit in Washington, D.C., March 18, both governments agreed to expand U.S. energy production and deepen bilateral cooperation, including potential joint storage of U.S.-sourced crude oil in Japan.
Korea
- Naphtha shortages are affecting the petrochemical sector, while LNG supplies are expected to remain manageable through year-end.
- The government has elevated the oil availability risk alert and adopted policies to control fuel sales prices and reduce fuel consumption in the public sector.
- As a long-term mitigation strategy, the government is diversifying energy imports and strengthening contingency and fiscal frameworks.
Rising uncertainty in the Middle East has prompted Korea to raise its crude oil alert to “caution” from “concern,” the second level in its four-tier resource security crisis system. This was in response to surging oil prices, deteriorating oil transportation conditions and broader supply chain uncertainty. At the same time, the Ministry of Trade, Industry and Resources maintains that oil supply disruptions are unlikely to become severe due to efforts to secure alternative supplies and the release of strategic reserves.
Natural gas remains at the “concern” stage, and LNG supplies are sufficient through year-end, according to the government. Reports of force majeure declarations by QatarEnergy on long-term contracts with Korea are being monitored, but the government noted these volumes were not included in its early supply planning and are not expected to affect overall supply.
Naphtha shortages are already affecting the petrochemical sector, forcing some plants to reduce production or temporarily halt operations. Approximately half of Korea’s naphtha supply is imported, and shortages are beginning to spread downstream to industries such as plastics. The petrochemical industry has raised concerns about a potential full-blown energy crisis as early as late April, though the government has downplayed this risk.
Korea has secured 24 million barrels of crude from the UAE, with 4 million barrels arriving in two shipments in late March and early April and the remainder scheduled to arrive in early to mid-April. Financial and secondary sanction barriers to importing Russian crude and petroleum products have been resolved, enabling Korean refiners to consider these alternative sources more actively.
Fuel price caps took effect March 13, setting an upper limit for fuel sales from refiners to gas stations. A mandatory “vehicle rotation” scheme for public institutions began March 25, and a temporary fuel tax cut has been expanded and extended until the end of May. Naphtha export limits will also be implemented to address shortages.
Authorities expect the impact of the crisis to last three to six months and are accelerating contingency measures. A KRW 25 trillion ($16.6 billion) supplementary budget is being prepared to mitigate energy supply disruptions, with the goal of processing it by April 10. An interagency emergency economic task force, chaired by the prime minister, is coordinating responses on energy supply stabilization, macroeconomic impacts and other measures.
Malaysia
- Malaysia faces emerging energy supply constraints, but public reactions have remained relatively subdued.
- The government has implemented targeted subsidies, fuel controls and demand-reduction measures while working to secure supply and stabilize logistics.
- To strengthen longer-term resilience, it is pursuing energy diversification, alternative sources and closer coordination with Petronas.
The emerging energy bottleneck in Malaysia is beginning to tighten fuel availability and raise near-term cost pressures, with reduced subsidized RON 95 petroleum purchase limit, from 300 liters to 200 liters per eligible Malaysian citizen, and capped diesel sales signaling early supply strain. These measures are expected to cascade into higher prices for food, logistics and travel, particularly around the Aidilfitri festive period, when demand typically peaks. The government has responded with a mix of targeted subsidies, consumption controls and modest austerity steps, including work-from-home arrangements to curb fuel use, while also moving to stabilize key shipping routes and maintain public confidence. Public reactions remain subdued but increasingly sensitive, because the direct impact on household expenses is only beginning to materialize. Inflation concerns are likely to intensify if global disruptions persist.
Looking ahead, authorities — working closely with state-owned oil enterprise Petronas — are focused on ensuring short-term supply adequacy, exploring alternative sourcing from Indo-Pacific partners and accelerating diversification into renewables and other energy sources. While current supply is sufficient in the near term, a prolonged disruption would likely amplify price pressures and test the government’s ability to balance fiscal support, energy security and economic stability.
Philippines
- The Philippines has declared a national energy emergency but maintains adequate short-term fuel stocks.
- Constraints in LPG and uneven partner support underscore the Philippines’ vulnerability to supply shocks, reinforcing the need for stronger contingency planning and more coordinated energy security mechanisms.
- The government is accelerating fuel procurement, exploring tax reductions and securing diversified imports through partners and Philippine National Oil Company.
President Ferdinand Marcos Jr. issued an executive order March 24, declaring a National Energy Emergency, which authorizes the Department of Energy (DOE), the Philippine National Oil Company (PNOC) and PNOC Exploration Corporation to urgently procure required fuel supplies and oversee the monitoring and management of fuel availability and distribution nationwide. Marcos also signed Republic Act 12316, which grants emergency powers to suspend or reduce fuel excise tax.
The Philippines maintains a sufficient energy outlook for April, with inventories of 53 days for gasoline, 45 days for diesel, 39 days for jet fuel and 61 days for fuel oil, though LPG remains limited at only 24 days. Beyond these levels, the country is actively engaging with foreign governments and private firms to diversify and secure additional supply sources to replenish its supply.
The Philippine government has initiated supply discussions with India, Brunei, Korea and the United States, with India emerging as the most advanced partner, while Brunei and Malaysia have shown limited willingness to extend supply. Concurrently, PNOC continues to secure deliveries such as the 142,000-barrel cargo from Japan, which has already arrived in the country.
Aligned with the president’s emergency powers to suspend or reduce excise taxes, the DOE has issued the trigger for review following the breach of the $80-per-barrel 30-day average threshold. This will now be evaluated by the Development Budget Coordination Committee, which will submit its recommendations to the president, with issuance projected as early as April 12-13. At the same time, the government is advancing supply diversification, with market actors pursuing nontraditional sources and preparing for potential price volatility while underscoring the need for clearer and more coordinated unified national contingency planning.
Singapore
- Singapore faces record-high fuel prices driving inflation, though energy reserves remain sufficient in the near term.
- Authorities are considering monetary tightening and preparing targeted support while encouraging energy conservation as short-term measures
- Singapore has engaged and worked through existing bilateral and multilateral agreements to secure energy supply as a longer-term measure.
The Iran war has driven Singapore’s fuel prices to record highs, surpassing the 2022 peak triggered by Russia’s invasion of Ukraine. Since the onset of hostilities in February, fuel prices have risen up to 20 percent, with downstream effects across the economy. Notably, taxi operators have introduced surcharges and household electricity tariffs have climbed by as much as 11 percent, as retailers pass on higher costs to consumers. Elevated fuel costs are also impacting policy timelines, with Singapore postponing the implementation of its sustainable aviation fuel levy from October 2026 to January 1, 2027, primarily in view of the impact of the ongoing conflict in the Middle East.
Singapore is closely monitoring inflationary pressures. The Monetary Authority of Singapore will update its inflation outlook in its April monetary policy statement, with economists anticipating a tightening of policy to support the Singapore dollar and mitigate imported inflation. Concurrently, Prime Minister Lawrence Wong said the government stands ready to deploy targeted measures beyond those already announced in the 2026 budget, including utility rebates and business support schemes, if conditions worsen.
Political leaders have, through various forums, reassured the public that LNG and diesel stockpiles remain sufficient to cover several months of demand. While precise inventory levels are withheld for security reasons, reserves have not been tapped as of March 20. Nonetheless, households and businesses are encouraged to adopt energy-efficient practices, such as using energy-saving appliances, raising air-conditioning temperatures and installing solar panels.
Externally, Singapore is strengthening energy security with the diversification of strategic partnerships. For instance, in October 2025, Singapore and New Zealand signed the Agreement on Trade in Essential Supplies, Singapore’s first legally binding bilateral arrangement on supply chain resilience. The agreement commits both countries to maintain access to essential supplies, including fuel and food, and refrain from imposing export restrictions on key goods.
Beyond formal treaties, Singapore has sought broader assurances from partners. A March 23 joint statement with Australia reaffirmed commitments to support the flow of essential goods, including LNG and petroleum products, and consult each other on any energy disruption. This is significant given Australia’s role as a major LNG supplier, accounting for nearly 40 percent of Singapore’s LNG imports in 2024 (excluding piped gas). At the same time, Singapore is an exporter of refined petroleum to Australia, supplying more than half of its petrol demand and ranking as its second-largest source of diesel and jet fuel. Wong also engaged Malaysian Prime Minister Anwar Ibrahim, with both sides pledging to safeguard regional stability amid pressures on oil supply.
Regionally, Singapore continues to advocate for deeper energy cooperation within Southeast Asia, including advancing the Association of Southeast Asian Nations Power Grid initiative to enhance cross-border electricity connectivity, facilitate renewable energy trade and reduce collective exposure to global fuel price volatility.
Taiwan
- Taiwan faces industry disruptions and rising LNG costs, oil prices and prices of key materials such as helium and methanol.
- The government has activated a price-stabilization task force, secured short‑term LNG supplies, expanded U.S. imports, applied oil price averaging over time and coordinated methanol and commodity supply management as short-term measures.
- Taiwan is diversifying LNG sources, exploring an inflation‑at‑risk framework and shifting energy policy by reopening nuclear plants 2 and 3 by 2028 as longer-term policy measures.
The war in the Middle East has created pressure on Taiwan’s energy supply and costs. Delays in LNG shipments from Qatar have increased strain on scheduling power generation to meet demands at the lowest cost. Higher global oil prices have raised import and transportation costs, contributing to inflation and reduced purchasing power. Key industrial inputs have also been affected. Helium, critical for semiconductor production, is being sourced from the United States and Australia at a higher cost, while supply gaps in industrial methanol are still being addressed.
In response, the government has activated a price-stabilization task force. According to the Executive Yuan, energy supplies for March and April are fully secured, with contingency LNG scheduling for May in place. Additional U.S. gas imports are planned from June, with about half of June’s supply already secured. Short-term supply remains stable, and planning for the second half of the year is ongoing.
To manage rising oil prices, Taiwan has implemented a price-smoothing mechanism that absorbed up to 75 percent of the increase, amounting to TWD 3.4 billion (US$106.3 million) between February 28 and March 22 alone. For methanol, the Ministry of Economic Affairs is coordinating private importers and industry associations to align supply and demand. The government has also reviewed 10 key commodities, including energy, industrial metals, precious metals and agricultural goods, and adopted a “no upstream price hikes, no downstream hoarding” principle to maintain stability.
The war in the Middle East has pushed Taiwan to strengthen diversification, expanding LNG import sources to 14 countries. State-owned CPC Corporation is increasing procurement from non-Middle Eastern suppliers, especially the United States and Australia. President Lai Ching-te has signaled openness to nuclear energy, driven by long-term demand, including artificial intelligence (AI) development. The central bank is also exploring an inflation-at-risk framework to improve inflation assessment and policy response.
After spending the better part of a decade closing nuclear power plants 1, 2 and 3 to remove all nuclear power generation, Lai has just ordered state-owned Taipower to reopen plants 2 and 3 by 2028 over geostrategic supply concerns and accelerating AI and data center demands from industry. This represents a major shift in the ruling Democratic Progressive Party’s long-standing energy policy.
Thailand
- Fuels remain generally available, but rising fuel prices, particularly diesel, are pressuring the transport, agriculture and fisheries sectors.
- The government is using the Oil Fuel Fund, targeted subsidies, excise tax adjustments, LPG controls, biodiesel promotion and coordination with refiners to stabilize prices as short-term measures.
- Thailand plans to introduce subsidy reforms and explore injections into the Oil Fuel Fund, the diversification of crude sources and increasing the use of coal as longer-term policies.
Thailand is experiencing localized distribution disruptions alongside rising fuel prices as opposed to a structural supply shortage. National supply remains adequate, supported by domestic refining capacity and reserves of approximately 90 days, but logistics bottlenecks, especially in the north and northeast, have led to temporary shortages at some petrol stations and fuel purchase limits. This reflects transport and inventory constraints rather than upstream supply issues.
The economic impact is most visible in diesel-dependent sectors such as road transport, agriculture and fisheries, where fuel costs are rising sharply and beginning to feed into logistics and food prices. Fuel price sensitivity is historically high in Thailand. Past spikes have triggered strong public and political reactions, making the government’s decision to float prices particularly salient.
Politically, pressure is emerging but remains sector specific. Transport operators and farmer groups have become more vocal, raising concerns over operating costs and margins. While not yet widespread, this “heated” response within key sectors is increasing political sensitivity for the government.
Thailand has maintained a cautious and neutral stance on the Iran war, emphasizing the need for deescalation and stable global energy markets while focusing on domestic energy management.
Thailand is expected to maintain a pragmatic approach, shifting from broad subsidies to targeted support while strengthening longer-term energy resilience. The government is balancing cost-of-living pressures with fiscal constraints. The Oil Fuel Fund remains the primary tool to manage price volatility, though authorities are gradually easing broad subsidies due to rising fiscal costs. Policy is shifting toward targeted support for the most affected groups: low-income households, transport operators, farmers, government contractors and small businesses. Measures include targeted subsidies, cash support, contract price adjustments and soft loans. Additional actions include temporary excise tax adjustments, continued LPG price controls, promotion of biodiesel blends (B7/B20) and coordination with refiners to address localized supply issues.
If disruptions persist, the government is considering up to THB 150 billion ($4.6 billion) in additional support for the Oil Fuel Fund, likely financed through public borrowing or budget reallocation, raising fiscal sustainability concerns. Longer-term measures include extending upstream petroleum concessions, diversifying crude sourcing and increasing reliance on domestic energy sources such as coal to stabilize power costs. Early signals also point to more structured energy pricing reforms and greater state involvement in managing energy security.
Vietnam
- Vietnam faces rising fuel prices and tightening supply risks due to delayed crude deliveries and falling inventories, with cost pressures already affecting logistics, transport, manufacturing and aviation.
- Authorities cut fuel taxes to zero, used the Fuel Price Stabilization Fund, tightened inspections, maximized refinery output and boosted LPG imports to maintain supply as short-term solutions.
- Vietnam aims to expand biofuels, improve refinery flexibility and develop a national strategic petroleum reserve as part of a long-term energy resilience policy.
Vietnam is facing heightened price pressure and tightening supply risks, rather than an immediate nationwide shortage. Domestic refineries (Dung Quat and Nghi Son), which supply about 70 percent of national fuel demand, have secured crude to maintain operations through the end of May. However, delayed crude deliveries and declining inventories have increased vulnerability beyond that time.
According to the Ministry of Industry and Trade’s assessment, retail fuel prices have risen sharply, but the increases remain below global benchmarks. Rising fuel costs are already feeding into logistics, transport and production, with higher freight rates, longer delivery times and cost pressures across manufacturing, agriculture and export‑oriented sectors. Vietnam Airlines plans to suspend some domestic routes from April 1 due to limited Jet A-1 supply and rising prices. Vietnamese carriers are also preparing to introduce fuel surcharges on international routes, potentially starting in early April.
The power supply may remain stable, but retail electricity prices may be adjusted in the coming months to reflect higher coal and LNG import costs.
In the short term, the government has prioritized price stabilization and supply continuity. Measures include reducing fuel import tariffs to zero percent, deploying the Fuel Price Stabilization Fund to smooth price shocks, advancing state budget funds to backstop the fund, tightening market inspections and directing refineries and traders to maximize output and inventories.
Prime Minister Pham Minh Chinh issued Decision 482/QĐ-TTg March 26 to temporarily reduce taxes on gasoline, diesel and aviation fuel in the national interest. The measures set the environmental protection tax to 0 VND per liter, exempted these fuels from value-added tax (VAT) declaration and payment (while still allowing input VAT credits) and reduced the special consumption tax on gasoline to zero percent. These policies are effective from March 26 to April 15.
Authorities are reviewing temporary crude export restrictions as suggested by PetroVietnam to protect domestic supply and facilitate access to credit and foreign currency for fuel imports. The Ministry of Industry and Trade also encourages businesses to adopt remote working where appropriate to save energy, particularly by reducing transport fuel consumption.
Petrovietnam Gas Corporation has secured 5,000 tons of LPG from the United States and 38,000 tons from Australia and plans to import around 48,000 tons more from the United States in April, along with smaller monthly shipments to ensure supply.
Public sensitivity is increasing due to fuel and transport costs, but no major social instability was reported, as price management has so far contained the shock.
The government is accelerating supply diversification, strengthening energy diplomacy with key producers, enhancing refinery feedstock flexibility and advancing the E10 biofuel rollout to curb gasoline demand.
The government has also initiated plans to establish a strategic petroleum reserve at Nghi Son in Thanh Hoa province along the north-central coast and is developing a National Energy Reserve Strategy to 2030, covering oil, gas, coal, power and new energy. The strategy is scheduled for submission to the government in November and is intended to reduce exposure to external shocks, manage price volatility and strengthen long-term energy security.
