Energy Shock to Political Stress: How the Iran Crisis Is Reshaping Stability Across Asia
BGA’s Energy Crisis series tracks the Indo-Pacific fallout from the Iran conflict, with a focus on how shocks to oil, liquefied natural gas (LNG) and shipping are reshaping energy security across key markets. Building on prior editions, this update takes a more focused look at the political implications of the crisis as governments and consumers adjust to the reality of prolonged disruption with growing domestic consequences.
Across the region, sustained price pressure tests the durability of subsidy regimes, exposing gaps in fuel stockpiles and import diversification and sharpening debates over energy transition timelines. In several markets, governments have moved from short-term price smoothing toward broader interventions, including targeted cash support, tighter market oversight and accelerated efforts to secure alternative supplies. Where public frustration is rising, leaders are increasingly balancing inflation control against fiscal constraints and political risk, with energy affordability emerging as a proxy issue for broader cost-of-living concerns.
Below is BGA’s market analysis and insights from our teams across the region on the political implications of the crisis and how sustained energy price pressures are translating into political and policy dynamics on the ground.
Future Iterations: Opportunity for Inputs
BGA will structure the next phase of this update series around targeted deep-dives on how a prolonged crisis is reshaping markets beyond near-term price effects. Upcoming editions will focus on the following:
- Power and electricity market dynamics, including procurement challenges and data center demand.
- Industrial impacts across petrochemicals and manufacturing supply chains.
- Agriculture, food and fertilizer systems, particularly in energy-import dependent markets.
As we refine these analyses, we want to ensure they align with your most pressing priorities. Please share specific questions, sectors or geographies where deeper insight would be most valuable — whether on exposure to risks, policy outlooks or market-entry considerations. We will tailor forthcoming updates to support your decision-making.
Please contact BGA Director of Energy, Climate and Resources (ECR) Chayamon Srisongkram, BGA Director of ECR Mardika Parama or BGA Head of Research Murray Hiebert with questions or comments.
Australia
Public Sentiment
Public anxiety tied to the conflict has eased over the past month because petrol prices fell and fuel shipments continued to arrive. A small number of service stations ran out of diesel, which is critical for mining and agriculture, but the government worked with industry and international partners to ensure affected regions received adequate supplies. Still, many Australians believe the government should do more to build the national fuel stockpile, boost domestic production and bring down prices. A fire disrupted output at one of Australia’s two refineries, which typically supplies about 10 percent of the country’s fuel, but it does not appear to have materially affected prices. Electric vehicle sales have jumped. The conflict is expected to push up prices across the economy, compounding persistent inflation that has led the Reserve Bank to raise the cash rate twice this year. Household spending has remained resilient, but consumer confidence has fallen amid projections of higher inflation and higher unemployment.
Subsidy Measures and Fiscal Responses
Cuts to the fuel excise tax, along with state governments foregoing windfall Goods and Services Tax revenue, have helped reduce prices, though they have not returned to pre-conflict levels. The crisis has complicated preparations for the May 12 budget because the government faces pressure to rein in spending, pursue tax reform and lift productivity. The government is also under growing calls, including from within its ranks, to secure more revenue from companies benefiting from higher LNG prices. It has announced an AUD 1 billion (US$720.4 million) Economic Resilience Program that offers zero-interest loans to logistics and manufacturing businesses materially affected by market disruptions and global price increases for key inputs.
Policy Shifts or Emergency Interventions
The federal and state governments released a National Fuel Security Plan March 30, with Australia remaining at “Level 2: Keeping Australia Moving.” The government is taking precautionary actions to shore up fuel supply, asked the public to make voluntary choices to use less fuel and engaged with key trading partners to shore up domestic supply. The Export Finance and Insurance Corporation Amendment (Strategic Reserve) Bill 2026 passed Parliament March 31, giving Export Finance Australia (EFA) new powers to underwrite fuel purchases (and other strategic materials) from international markets.
Subsequently, the EFA has partnered with Ampol, BP Australia and Viva Energy to secure approximately 400 million liters of additional diesel. The prime minister and colleagues have visited key supplier countries across the region — including Singapore, Japan, Korea, China, Malaysia and Brunei — and reminded them that Australia remains a vital supplier of LNG across Asia. Australia and Singapore concluded negotiations April 17 on the Protocol on Economic Resilience and Essential Supplies to the Singapore-Australia Free Trade Agreement.
Election Implications
The Labor government has remained politically dominant since its landslide election win in May 2025 and is expected to comfortably win the next election projected to be held in 2028; there has been no notable shift in the opinion polls since the conflict began. The war has made clear Australia’s continued dependence on fossil fuels, despite the government’s ambitious renewable energy agenda, and invited debate about the cost of Australia’s energy transition. The government argues the “fossil fuel crisis” demonstrates a need to build renewables capacity, while critics assert that the government has squandered Australia’s historic advantage in cheap fossil fuels amid mixed international signals about the feasibility of the energy transition. Energy policy will be strongly contested in the next election, in part due to the aggressive agenda of the right-wing “populist” One Nation Party, which is performing strongly in opinion polls.
Cambodia
Public Sentiment
Economic anxiety is rising in Cambodia as retail fuel prices continue to climb, despite no major supply disruptions. Higher costs are squeezing households and pressuring the transport and food sectors, prompting more cautious consumer spending. Businesses warn that inflation could erode competitiveness, while skepticism is growing about the sustainability of subsidies and tax cuts. Cambodia’s diesel and gasoline imports totaled $624 million in the first quarter of 2026, up 15.5 percent from the year before. The government argues that stronger reserves, new refinery capacity and faster adoption of renewable energy could reduce exposure to external shocks and volatile import markets.
Subsidy Measures and Fiscal Responses
Cambodia has expanded fiscal and regulatory measures to blunt fuel-price shocks since late February, when the Middle East tensions disrupted global supply. The government has deployed multiple tools, including about $47 million in monthly subsidies, a value-added tax cut to 4 percent from 10 percent, the removal of some customs duties and the elimination of a 4 percent diesel tax. The World Bank and the Asian Development Bank are also preparing support packages intended to stabilize inflation and transport costs.
Policy Shifts or Emergency Interventions
Beyond subsidies, the government is focused on securing supply and building resilience. It has tightened oversight by convening supplier meetings every three days to stabilize retail markets. Imports have diversified beyond Vietnam and China, with increasing reliance on Singapore and Malaysia. Plans for the country’s first refinery within three years are being positioned as a strategic hedge against external shocks. The World Bank and the Asian Development Bank are preparing additional fiscal packages. Longer-term opportunities include building reserves and advancing Cambodia’s 70 percent clean-energy transition target.
Election Implications
Rising oil and gas prices are emerging as a politically sensitive issue in Cambodia ahead of commune elections in 2027 and the general election in 2028. Household budgets remain under strain, while businesses warn inflation is eroding competitiveness. Government interventions — monthly subsidies, tax cuts and import diversification — have stabilized supply but intensified debate over fiscal sustainability and long-term energy security. Opposition figures will likely frame the crisis as evidence of overreliance on imports, while the government is emphasizing refinery development and a transition to 70 percent clean-energy. Energy policy and economic resilience are expected to become more contested as the elections approach.
China
Public Sentiment
Public concern about fuel costs remains elevated but has not translated into visible unrest. The main sensitivity has been the cumulative rise in retail fuel prices since the conflict began. Adjustments on March 10, March 23 and April 7-8 added to pump prices, though the National Development and Reform Commission’s (NRDC)price controls capped increases well below levels implied by international markets. The April 21 cut, the first since the conflict began, provided some relief. Official sources have not released data on consumer sentiment, panic buying or fuel queues like those reported elsewhere in the region, and the government has not publicly addressed domestic public reaction to fuel price increases.
Government messaging has framed the situation as an external shock. The Ministry of Foreign Affairs has repeatedly attributed the disruption to U.S.-Israel military operations rather than domestic supply constraints or policy failures, and it has maintained that line in regular press briefings.
Subsidy Measures and Fiscal Responses
The NDRC management of retail fuel prices has been the most visible domestic intervention, and the approach has shifted since the prior update. The NDRC imposed the first temporary price controls March 23 under China’s current pricing mechanism since it was introduced in 2013, capping the adjustment at CNY 1,160 ($170) per metric ton for gasoline and CNY 1,115 ($163) per metric ton for diesel, versus a market-implied increase of CNY 2,205 ($323) and CNY 2,120 ($310), respectively. The agency said the controls aimed to mitigate an abnormal rise in international oil prices, reduce the burden on downstream users and support stable economic operations.
A second round of controls followed on April 7-8, limiting increases to CNY 420 ($62) per metric ton for gasoline and CNY 400 ($59) per metric ton for diesel, versus a market-implied CNY 800 ($117) and CNY 770 ($113), respectively. The cumulative gap between regulated retail prices and market-implied levels amounts to several thousand yuan per metric ton over the crisis period, representing an implicit subsidy absorbed by state oil companies. The NDRC cut prices April 21 by CNY 555 ($81) per metric ton for gasoline and CNY 530 ($78) per metric ton for diesel after average international crude prices over the prior 10 working days fell, despite a rebound April 20. At each adjustment, authorities directed state-owned firms to maintain production and ensure stable supply.
Authorities have not announced emergency fiscal measures, direct consumer subsidies or supplementary budget provisions.
Policy Shifts or Emergency Interventions
A major external development was the escalation of the U.S. blockade of the Strait of Hormuz April 13, which the Ministry of Foreign Affairs called dangerous and irresponsible. Commercial shipping through the strait halted that night after Iran’s Islamic Revolutionary Guard Corps warned military vessels away from the waterway. China condemned the blockade while continuing to call for a ceasefire and dialogue and confirmed ongoing energy cooperation with Russia. When Russian Foreign Minister Sergey Lavrov visited Beijing April 15 and said Russia could compensate for shortfalls caused by the blockade, the ministry said China and Russia engage in practical cooperation, including in energy, on the basis of mutual respect and mutual benefit.
U.S. President Donald Trump urged China April 13 to buy oil from the United States or Venezuela and announced measures targeting countries that trade energy with Iran. China declined to address Iran-related trade directly, saying it stands ready to work with others to safeguard global energy security and keep supply chains stable. The ministry also declined to confirm reports that refiners were told to suspend oil exports.
After the ceasefire expired April 22, the ministry cited President Xi Jinping’s four-point proposition on Middle East peace, signaling a higher-profile diplomatic posture. Foreign Minister Wang Yi visited Cambodia, Thailand and Myanmar from April 22-26, and energy security was expected to feature in the engagements given China’s stated readiness to coordinate with regional partners on supply stability.
India
Public Sentiment
Public sentiment has been driven more by anxiety than by systemic disruption. Official data show panic buying in March: diesel demand rose to 8.7 million metric tons from 7.7 million in February, while petrol climbed to 3.8 million metric tons, the highest level in months. Unverified reports about Indian vessels in the Strait of Hormuz helped trigger the rush, and some fuel outlets in several states temporarily closed. Liquefied petroleum gas (LPG) deliveries have normalized to 5.2 million cylinders a day from a peak of 8.9 million during panic buying, but prices posted a sharp monthly increase of $3.60 per cylinder. LPG consumption fell to 2.4 million metric tons in March, reflecting commercial cutbacks and household restraint as prices rose.
Subsidy Measures and Fiscal Responses
India’s response has focused on absorbing price shocks through foregone tax revenue rather than announcing large new subsidies. The last major support measure was a Cabinet decision August 8, 2025, allocating about $3.6 billion to compensate oil marketing companies for the prior year’s LPG losses, with payments spread over the current fiscal year. No new compensation has been announced since the crisis began, even as losses have climbed. LPG revenue losses reached $3.7 billion by March 2026 and could rise to $4.8 billion by the end of May, implying revenue losses of about INR 380 ($4) per cylinder. In parallel, the government cut excise duty by about $0.12 a liter to help ease company costs and limit retail price increases, alongside targeted LPG support of about $1.4 billion in fiscal year 2026 for vulnerable households. A review in July is expected to determine whether additional compensation or price adjustments are needed.
Policy Shifts and Emergency Interventions
India’s response has combined near-term market intervention with longer-term supply diversification. The government has expanded LPG sourcing to 15 countries and crude procurement to about 40, up from 27. About 70 percent of imports now move on routes outside the Strait of Hormuz, compared with 55 percent previously. Reserve coverage is about 60 days. Authorities have prioritized household and transport fuel, curtailed industrial gas use and directed refiners to boost domestic availability by limiting exports. Fuel ethanol is also being positioned as an energy security tool, using domestic surplus to cut import reliance. The government has signaled it is ready to resume and scale blends beyond E20, marking a policy shift.
Election Implications
State assembly elections in five states in April, with results due May 4, have put energy costs at the center of political narratives. Both ruling and opposition platforms have highlighted cost relief, including proposals for free LPG cylinders and direct cash transfers. While some analysts expect fuel prices could rise by $0.30 to $0.34 a liter after the elections amid elevated crude prices, the Ministry of Petroleum and Natural Gas has denied any such plans, even as market expectations persist due to rising revenue losses at oil marketing companies.
Indonesia
Public Sentiment
Public pressure remains contained but is gradually building. Dissatisfaction has begun to surface after price increases for higher-tier fuels such as RON95 and premium diesel. The impact has been limited because those products are largely used by higher-income consumers. Most motorists still rely on RON90 Pertalite and RON92 Pertamax, which have not been adjusted. Some consumers are also trading down from RON95 to RON92 as they adapt to higher prices.
Second-round effects are becoming more visible. Higher input costs for non-subsidized diesel used in logistics and industry have begun to push up prices for essential goods and plastics. Purchasing behavior remains stable for now, but sensitivity to cost-of-living pressures is rising. Sentiment could deteriorate quickly if core fuel prices are revised.
Subsidy Measures and Fiscal Responses
Cracks are emerging beneath headline stability, especially through industrial price increases due to higher costs. The government’s response has shifted toward targeted, sector-specific relief rather than broad consumer subsidies. Import duties on naphtha have been reduced to support the petrochemicals and plastics industries as feedstock costs rise. In parallel, the government is temporarily absorbing value-added tax on airline tickets to offset higher jet fuel prices and sustain demand.
Policy Shifts or Emergency Interventions
The government initially assessed the war-driven supply shock to be short-lived, but that view is harder to sustain because fuel and LPG stocks remain below national standards. Policy is shifting from passive price stabilization toward active supply security, including securing alternative sources and preventing further strain on domestic availability. Officials say they have secured additional Russian oil to help stabilize supply.
Japan
Public Sentiment
In Japan, the rise in energy prices has been partially contained through government subsidy measures, and there are currently no signs of large-scale protests or widespread social unrest. Public approval of the administration of Prime Minister Sanae Takaichi remains high, holding at just under 70 percent.
The business community has also conveyed a sense of stability. The CEO of Tokyo Electric Power Company noted that the restart of the Kashiwazaki-Kariwa nuclear power plant would contribute to reducing reliance on fossil fuels. In addition, Takaichi said April 30 that the required volume of naphtha for 2026 has already been secured.
Overall, the government is working to contain public concerns through both supply assurance and price stabilization. At the same time, pressures related to energy prices and the cost of living are gradually accumulating.
Subsidy Measures and Fiscal Responses
Japan relies heavily on imported crude oil, with over 90 percent of its imports passing through the Strait of Hormuz in 2025. Government subsidy measures have helped contain gasoline prices. Since mid-March, retail prices have been maintained at approximately JPY 170 ($1.08) per liter, a level below the 2025 average.
Japan also maintains strategic petroleum reserves exceeding 211 days of consumption as of April 28. In mid-March, the government began releasing approximately 15 days’ worth of reserves, with an additional 20 days’ worth planned for release in early May.
Diversification of procurement sources is progressing. As of April, approximately 20 percent of crude oil supply was sourced from routes outside the Strait of Hormuz; this share is expected to increase to around 60 percent in May. For LNG, Japan’s dependence on the Middle East stands at approximately 10 percent, with only 6.3 percent of imports transiting the Strait of Hormuz. In addition, Japanese power and gas companies maintain inventories equivalent to roughly one year of imports, providing an additional buffer against supply disruptions.
Policy Shifts or Emergency Interventions
The Japanese government and the Bank of Japan intervened in foreign exchange markets April 30 to support the yen, which had weakened sharply to the high JPY 160s per U.S. dollar amid rising oil prices. The intervention triggered a rapid rebound, with the yen strengthening to the mid-JPY 150s May 1.
A central concern for policymakers is the trajectory of oil prices. Given Japan’s heavy reliance on imported fossil fuels, higher oil prices tend to widen the trade deficit and amplify depreciation pressure on the yen.
In response, the Ministry of Finance is reportedly considering additional measures beyond currency intervention, including potential action in crude oil futures markets. The intervention is understood to have been conducted in close coordination with U.S. authorities.
Election Implications
No national-level elections are scheduled until the Upper House election in the summer of 2028. As a result, despite current challenges, the stability of the Takaichi administration is expected to be maintained in the near term. However, the Liberal Democratic Party presidential election is scheduled for September 2027. If support for the Takaichi Cabinet weakens then, political risks could emerge, making the coming year a critical period.
Korea
Public Sentiment
Korea has not seen organized unrest linked to rising energy costs so far, but signs of growing dissatisfaction are emerging. President Lee Jae-myung’s approval rating slipped from the mid-60s to the low 60s in late April, suggesting unease as oil prices and inflation remain elevated. Sector-specific discontent is also building, with gas station operators and petrochemical companies warning of mounting losses.
Subsidy Measures and Fiscal Responses
The government is providing targeted cash support, branded as a high oil price subsidy, as part of a broader fiscal response. A KRW 26.2 trillion ($17.8 billion) supplementary budget approved April 10 provides payments to vulnerable groups, including basic livelihood security recipients and single-parent households. Eligible recipients can receive KRW 450,000 ($304) or KRW 550,000 ($370) per person, plus KRW 50,000 ($34) for residents outside Seoul or in depopulating regions. Some beneficiaries have welcomed the support, but its reach is limited because it cannot be used at about 64 percent of gas stations with annual sales above KRW 3 billion ($2 million).
Policy Shifts or Emergency Interventions
The government continues to rely on short-term market interventions to contain inflation. It extended the fuel price cap for a fourth time April 24, setting maximum prices for gasoline and diesel. The cap has helped limit increases, but questions are growing about fiscal sustainability and the measure’s longer-term viability.
Election Implications
Energy-driven cost-of-living pressures are shaping the run-up to local elections June 3. Of 151 local governments, 37 have introduced or pledged additional cash support. Critics say incumbents are using subsidies as electoral tools to bolster their re-election prospects.
While there are no clear signs of imminent instability, softening approval ratings, sectoral strain and expanding fiscal support point to rising pressure on the government. In the near term, policy will likely stay focused on containing inflation and providing income support, while concerns persist about fiscal burdens and the politicization of subsidies ahead of the vote.
Malaysia
Public Sentiment
Sustained energy-price pressures are feeding broader cost-of-living concerns in Malaysia. Dissatisfaction is building among small and medium-sized businesses and lower- to middle-income households, amplified by online criticism and fears of tighter fuel quotas and wider subsidy rationalization. Rising transport and food costs are reinforcing perceptions of persistent inflation. Public tolerance remains closely tied to continued government cushioning, leaving limited political room for even modest price adjustments.
Subsidy Measures and Fiscal Responses
The government is trying to balance price stability with fiscal sustainability through targeted subsidies. RON95 petrol remains capped at MYR 2 ($0.50) a liter, while monthly consumption quotas were cut to 200 liters from 300 to curb leakages. Targeted diesel assistance has been expanded for key sectors such as agriculture, logistics and public transport. Total fuel subsidy spending has climbed to about MYR 7 billion ($1.8 billion) a month, increasing pressure on public finances.
The strain has accelerated a shift toward more targeted, efficiency-focused support, though broad subsidy reforms remain politically sensitive. The government has also ordered ministries and agencies to reduce operating spending this year as it manages the conflict’s spillover effects. The Health and Higher Education ministries face the largest reductions, totaling MYR 5.4 billion ($1.4 billion).
Policy Shifts or Emergency Interventions
Malaysia is taking a more interventionist approach to protect energy security. It is coordinating closely with Petroliam Nasional Berhad, or Petronas, to diversify import sources and is intensifying enforcement against smuggling and cross-border leakages. Amid heightened risks around the Strait of Hormuz, the government has also engaged Iran on safe passage for Malaysian-bound shipments, underscoring the role of diplomacy in maintaining supply continuity. These steps are paired with efforts to refine subsidy delivery and strengthen system resilience.
Election Implications
Energy affordability is increasingly shaping Malaysia’s political landscape ahead of a general election due by 2028. For Prime Minister Anwar Ibrahim’s unity government, fuel prices and subsidy policy are key political levers that influence reform timing and sequencing. Upcoming state elections in Melaka and Johor, along with uncertainty in Negeri Sembilan, are reinforcing a cautious approach. As a result, reforms are being paced to avoid sharp price increases, reflecting the interplay between sustained economic pressures, fiscal constraints and political stability.
Philippines
Public Sentiment
Public dissatisfaction was pronounced through March and the first two weeks of April, with protests and nationwide transport strikes. Demonstrations were driven by sharp fuel price increases, alongside calls for wage hikes and demands to suspend excise taxes, remove value-added taxes on fuel and impose price controls. Anger was amplified by perceptions of limited government action.
By the second half of April, protest activity eased as subsidies were introduced and partial price rollbacks took effect. Dissatisfaction remains, however, and is likely to persist unless the government implements more durable measures to ease cost-of-living pressures.
Subsidy Measures and Fiscal Responses
The government has rolled out a mix of targeted subsidies, price interventions and supply-side measures to cushion rising fuel costs. Authorities launched fuel subsidies for public utility vehicles under the UPLIFT program, a coordinated support package for livelihood, industry, food and transport,. After declaring a state of national energy emergency under Executive Order No. 110, the government imposed price-management measures, including caps on increases and mandated rollbacks. It also temporarily suspended excise taxes on LPG and kerosene and earmarked PHP 20 billion ($326 million) from the Malampaya gas fund to build strategic fuel reserves and stabilize supply.
Policy Shifts or Emergency Interventions
The government has added short-term regulatory and market steps to stabilize prices and bolster supply security. The Department of Energy has expanded oversight by requiring disclosure of oil storage capacity and mandating price unbundling to deter overpricing and anti-competitive behavior. In the power sector, the department issued special operating guidelines for system dispatch to prioritize lower-cost sources such as renewables and coal over higher-cost imported fuels such as LNG and diesel. Structural reforms are also under discussion, including proposed changes to the oil deregulation law and debate over removing value-added and excise taxes on some fuel products.
Election Implications
Energy-driven cost-of-living pressures are increasingly shaping the political environment. A recent survey found about 50 percent of adults reported a decline in their quality of life. Heavy reliance on imported fuel heightens exposure to global price shocks, with effects cascading through transport, food and electricity costs and eroding household purchasing power. The squeeze poses a growing welfare challenge, particularly for an estimated 1.3 million near-poor Filipinos at risk of slipping into poverty.
Perceptions of the government’s response are weighing on the president’s trust and performance ratings. While elections are not until 2028, sustained negative sentiment could constrain policy options and affect the prospects of any candidate he may eventually endorse, particularly given the lack of a clear successor.
Singapore
Public Sentiment
A Singapore Business Federation survey released April 22 cited higher energy prices and rising shipping and freight costs as the main pressures on companies stemming from the conflict. Detailed parliamentary updates earlier this month, including plans to bring forward or expand parts of the 2026 budget, appear to have eased broader concerns. Singapore’s role as a regional trading and refining hub has also insulated the country from more drastic steps taken elsewhere in the region.
Policy Shifts or Emergency Interventions
Singapore’s response has focused on preserving supply continuity and limiting volatility. Leaders have stressed that, as an open economy, Singapore should allow fuel prices to reflect market conditions rather than cut duties across the board. State gas buyer GasCo secured additional imports to augment supplies without drawing on stockpiles. Externally, Singapore has reinforced its rules-based approach. Foreign Minister Vivian Balakrishnan said the country will not negotiate with Iran on transit passage through the Strait of Hormuz, citing rights established under the U.N. Convention on the Law of the Sea, even as some countries pursued toll-based arrangements.
Election Implications
The ruling People’s Action Party’s strong showing in the 2025 general election gives the government room to respond without immediate electoral pressure. Still, officials are expected to remain attentive to cost-of-living concerns even though the next election is not due until late 2030, given the issue’s sustained salience in recent years.
Taiwan
Public Sentiment
Energy-related public pressure in Taiwan remains contained, with no major protest movement tied to fuel, electricity or broader cost-of-living issues. Still, consumer confidence data suggest rising sensitivity to inflation and energy costs. Taiwan’s consumer confidence index fell 4.3 points to 62.3 in March, the lowest level in more than three years, partly on concern the conflict could disrupt energy supplies and reignite inflation. The index stabilized slightly in April, supported by stock market gains and a government-backed fuel price freeze, but price expectations remained weak. Public tolerance appears tied to continued government cushioning, especially amid debate over electricity prices, losses at state-run utility Taipower and broader questions about Taiwan’s energy policy.
Subsidy Measures and Fiscal Responses
The government has prioritized price stabilization through fuel and electricity measures. CPC Corporation, Taiwan’s state-run oil and gas company, has kept gasoline and diesel prices frozen for four consecutive weeks under government instructions and absorbed about 9 cents a liter for gasoline and 14 cents a liter for diesel in the latest weekly adjustment. Since the United States and Israel attacked Iran in late February, CPC has absorbed about $393 million in losses to limit domestic price increases. Electricity rates were also left unchanged for the April-September review period, keeping the average rate at about $0.12 per kilowatt-hour. The next inflection point will be the September review for fourth-quarter rates, when sustained fuel-cost pressures could be harder to absorb.
Policy Shifts or Emergency Interventions
Taiwan’s response has expanded beyond price controls to broader energy security management. The Executive Yuan has held weekly meetings to monitor energy supplies, essential goods, supply chains, market order and financial stability. The government has frozen residential natural gas, bottled gas and electricity prices, reduced taxes on key raw materials, and stepped up inspections against hoarding and price gouging. The Ministry of Economic Affairs and CPC are also diversifying crude oil and LNG procurement away from Middle East sources while keeping oil and gas stockpiles above legal minimums.
Election Implications
Energy pressures are unlikely to trigger immediate instability, but they are likely to become more politically salient ahead of local elections in November. The ruling Democratic Progressive Party is expected to frame its approach around economic stability, supply security and industrial resilience. Opposition parties are likely to focus on the fiscal burden of subsidies, financial risks at Taipower and CPC and debates regarding the longer-term energy mix, including nuclear power. Sustained pressure would raise the cost of short-term stabilization while sharpening political disputes over long-term energy security.
Thailand
Public Sentiment
Public sentiment remains contained, with no large-scale protests. Still, higher fuel and transport costs are affecting visible constituencies such as logistics operators, farmers and small businesses. Pressure has largely been channeled through formal mechanisms, including letters to the energy minister calling for government intervention.
The appointment of civil society representatives to a ministerial committee on energy price restructuring has helped build trust and created a formal channel for engagement. These groups remain sensitive to cost-of-living increases, however, and could become focal points of political pressure if price strains persist and affordability gains salience in public debate.
Subsidy Measures and Fiscal Responses
Relief measures remain targeted, and sustaining price controls is increasingly dependent on borrowing.
The government has prioritized targeted fiscal intervention, including reductions to ex-refinery diesel prices and consideration of tax adjustments. Officials are weighing additional borrowing, including a proposed THB 20 billion ($618.7 million) loan for the Oil Fund. Public debt stands at about 66 percent of gross domestic product, and the government has signaled it is prepared to raise the 70 percent ceiling if needed. Authorities have so far avoided issuing loan guarantees, indicating caution about broader fiscal exposure.
Policy Shifts or Emergency Interventions
A proposed electricity tariff overhaul, pending approval, would introduce tiered pricing. It would cap rates below THB 3 ($0.09) per unit for households using fewer than 200 units a month, covering more than 23 million households, while raising tariffs for higher-usage customers.
The crisis is reinforcing medium-term shifts in energy policy. Thailand is accelerating LNG supply diversification toward sources such as the United States, Australia, South Africa and Malaysia to reduce reliance on the Middle East. The government is also leaning more on domestic alternatives, including biodiesel and natural gas, alongside increased coal use to manage volatility.
More broadly, officials appear poised to fold the crisis into a wider reform agenda that includes continued subsidies, electricity market adjustments and support for clean energy and carbon frameworks. The approach points to a dual track: near-term energy security measures paired with longer-term diversification and transition goals.
Election Implications
There are no immediate election-related risks. The government holds a stable majority and is expected to maintain continuity in the near term, reducing the likelihood that energy price pressures translate into electoral volatility.
However, internal dynamics, including potential controversial appointments, corruption-related cases and coalition frictions, could complicate policy coordination. While not destabilizing, these factors could slow government responses if economic pressure persists.
Vietnam
Public Sentiment
The disruption has not translated into major social instability, even as the conflict pushed up the cost of living. Vietnam’s consumer price index rose 1.2 percent in March from February. After a sharp early spike, prices for key products have begun to stabilize as government measures take effect.
Gasoline: As of April 26, the retail price was about VND 22,880 ($0.87), down from a March 24 peak of VND 33,840 ($1.28) and near the pre-conflict level of about VND 20,150 ($0.76) February 26.
LPG: Domestic prices vary by region and supplier. In Hanoi, a 12-kilogram household cylinder from Petrolimex is about VND 598,104 ($22.70), up 38 percent from about VND 432,216 ($16.40) in early March.
Subsidy Measures and Fiscal Responses
As an export-oriented economy, Vietnam has long used subsidies for fuel and other critical inputs to lower production costs and sustain competitiveness.
The conflict has prompted unusually expansive measures. The government has used about VND 8 trillion ($303.5 million) from the petroleum price stabilization fund to help steady retail prices and has waived the environmental protection tax on gasoline (excluding ethanol), diesel, kerosene, fuel oil and aviation fuel, as well as the excise tax on gasoline. These fuels are also exempt from value-added tax declaration and payment. Officials estimate the measures reduce budget revenue by about VND 7.2 trillion ($273.2 million) a month. The waivers have been extended once and are scheduled to remain in place through June 30, with the option to extend further depending on macroeconomic conditions and global prices.
Policy Shifts or Emergency Interventions
The conflict has not fundamentally changed Vietnam’s energy policy direction, but it has pushed the government to clear implementation bottlenecks and set more ambitious targets.
Electricity market: There has been a renewal of and stronger political support for nuclear power and integrated renewables plus storage projects, to reduce exposure to volatile fossil fuel-based power sources. Many LNG-fired power plants and LNG-based infrastructure projects still witnessed major progress, signifying its continued importance in the energy transition and short-term irreplaceability. The Ministry of Industry and Trade has also recently modified the time-of-use electricity pricing framework in place from 2014 to better reflect current generation mix with many variable renewables, which will be implemented along with upcoming retail pricing adjustment and may also have a positive impact for the development of battery energy storage system projects on large scale. On the demand side, through Directive 09, the government is actively promoting energy efficiency and the rollout of electric vehicles.
Petroleum markets: From before the conflict, Vietnam has been a net petroleum importer and under Resolution 70-NQ/TW of the Politburo, by 2030, domestic refineries must be able to sustain at least 70 percent of national demand, and the national reserve capacity must reach 90 days of net imports. The conflict has forced energy policymakers to take petroleum reserves and the domestication strategy more seriously, achieve remarkable results of increasing reserve capacity from 15 days of net import to 26 days within over one month. There are also plans for urgent constructions of various new strategic national reserves alongside Nghi Son, Long Son and Dung Quat Refineries, as well as early the rollout of E10 biofuels to reduce domestic gasoline demand. The government is also intensifying market inspection to prevent stockpiling activities and ensure petroleum wholesalers complied with mandatory commercial reserve levels, with three major distributors recently fined $5,200 for violations.
Election Implications
The conflict has not materially altered Vietnam’s political landscape. However, it may increase pressure in coming months on the Ministry of Industry and Trade, which leads energy policy and implementation, to ensure energy security. Prime Minister Le Minh Hung has directed the ministry to prevent electricity and fuel shortages under any circumstances, particularl
