BGA Directors of Energy, Climate and Resources (ECR) Chayamon Srisongkram and Mardika Parama wrote an update to clients on the Strait of Hormuz reopening.

Context 

  • Although a U.S.-Iran framework agreement was signed June 17, the Strait of Hormuz remains officially contested, while shipping through the strait has resumed gradually. Oil prices have fallen from crisis peaks and tanker operators are returning to Gulf routes, but shipping traffic remains below historical norms, insurers continue to charge elevated war-risk premiums and vessel backlogs remain across the Gulf. Thus, commercial conditions remain complicated, with both sides agreeing to a June 22 road map to reach a final deal in 60 days, although the United States and Iran are still not aligned on their objectives regarding uranium enrichment.
  • Sentiment around energy availability has improved in Asia. In Japan and Korea, concerns about crude oil and liquified natural gas (LNG) supplies have eased as refiners gain confidence in securing Middle Eastern cargo and governments become less likely to draw further on strategic reserves. In India, the reopening allows policymakers to shift from emergency planning to replenishing reserves and managing energy affordability.
  • Oil and LNG flows are expected to recover relatively quickly, while the rebound from the broader economic effects of the crisis, including supply chain disruptions to fertilizer, petrochemicals, chemicals, manufacturing inputs and food, will take much longer as inflation persists. Fertilizer shortages and higher input costs are expected to keep food inflation elevated in parts of Asia, with agricultural effects potentially lasting through multiple growing seasons. Chemical, petrochemical, manufacturing and semiconductor supply chains will recover more slowly due to complex downstream dependencies. 

Significance 

  • For governments and businesses across the Indo-Pacific, the focus is shifting to long-term resilience. The crisis has renewed attention on strategic reserves, supply chain diversification, regional energy cooperation and the transition to renewable energy. Countries with established energy security planning, such as Japan, have reinforced the importance of strategic petroleum reserves and long-term planning. Other governments across the region are reviewing reserve levels, emergency response mechanisms and stockpiling policies. Many are also assessing vulnerabilities beyond crude oil.
  • The crisis has revived discussions on regional energy cooperation. In Southeast Asia, policymakers are focusing on reviving and renewing existing mechanisms such as the ASEAN Petroleum Security Agreement (last renewed in 2025) to allow member states to support each other’s energy needs during supply disruptions. They are also accelerating discussions on the ASEAN Power Grid to connect the electricity networks of member states. Governments are also exploring broader crisis-response coordination and greater regional energy sharing.
  • The disruption has also renewed interest in diversification. Governments are treating renewable energy, alternative fuels and diversified import routes as tools for strategic resilience, not only as climate measures. No government expects a rapid shift away from hydrocarbons, but the disruption has underscored the need to reduce dependence on a small number of vulnerable supply routes. Indonesia, Vietnam, Australia and Singapore will likely continue advancing energy transition initiatives while strengthening conventional energy security. 

Implications 

  • Companies should monitor physical crude and LNG availability, tanker traffic through the strait, war-risk insurance premiums and Gulf export recovery rates. Benchmark prices may continue to ease, but elevated shipping and insurance costs could keep delivered energy prices above pre-crisis levels. The pace at which producers restore output and traders resume normal purchasing patterns will be a critical indicator of normalization. 
  • For agriculture and food supply chains, companies should watch fertilizer availability, planting decisions and food inflation trends across the region. In chemicals and manufacturing, companies should monitor the recovery of petrochemical feedstocks, especially naphtha, and chemical supply chains that support industrial production. Downstream sectors, including plastics, industrial chemicals, medical equipment and semiconductors, will recover slowly.
  • Companies should watch for signs that the interim peace agreement is becoming durable. Sustained shipping volumes, lower insurance costs, replenished strategic reserves and the absence of renewed Gulf disruptions will offer the clearest signs that the region is moving towards normalization. Until then, businesses should expect continued volatility and plan for a recovery measured in months for energy markets and potentially years for some supply chains. 

We will continue to keep you updated on developments on the Strait of Hormuz as they occur. If you have any comments or questions, please contact BGA ECR Directors Chayamon Srisongkram at csrisongkram@bowergroupasia.com or Mardika Parama at mparama@bowergroupasia.com.

Best regards, 

BGA ECR Team 

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BowerGroupAsia