CNA Explains: Why Asia will bear the economic brunt of the Iran\nwar<\/p>\n
Singapore\u2019s Foreign Affairs Minister Vivian Balakrishnan has\ndescribed the closure of the Strait of Hormuz as an \u201cAsian crisis\u201d.<\/p>\n
SINGAPORE: A war in the Middle East has become an economic crisis for\nAsia.<\/p>\n
The closure of the Strait of Hormuz, one of the world\u2019s most critical\nenergy chokepoints, has disrupted fuel supplies and pushed up prices\nacross the region.<\/p>\n
About 20 million barrels per day (mb\/d) of crude oil and oil\nproducts, or roughly a quarter of the world\u2019s seaborne oil trade, passed\nthrough the strait in 2025. About 80 per cent of those shipments were\nbound for Asia, according to the International Energy Agency (IEA).<\/p>\n
That means any disruption is felt most acutely in energy-importing\neconomies thousands of kilometres away from the war zone.<\/p>\n
In an interview with Reuters, Singapore\u2019s Foreign Affairs Minister\nVivian Balakrishnan described the situation as an \u201cAsian crisis\u201d.<\/p>\n
CNA explains why.<\/p>\n
Why is this war being described as an \u201cAsian crisis\u201d?<\/p>\n
The answer lies in where the world\u2019s energy is going.<\/p>\n
The Strait of Hormuz is a narrow sea passage, separating the Arabian\nPeninsula from Iran, and connecting the Persian Gulf with the Gulf of\nOman and the Arabian Sea.<\/p>\n
As the primary export route for oil and gas produced by Saudi Arabia,\nthe United Arab Emirates, Kuwait, Qatar, Iraq, Bahrain and Iran, and\nwith limited options to bypass it, any disruption to flows through the\nstrait would have huge consequences, says the IEA.<\/p>\n
But the impact is not evenly distributed.<\/p>\n
Asia is the primary destination for these energy flows, with China,\nIndia and Japan among the largest importers.<\/p>\n
This creates a mismatch between where the conflict is happening and\nwhere its economic effects are felt.<\/p>\n
Dr Balakrishnan described this as an \u201casymmetry of the military\ndimension and the economic dimension\u201d.<\/p>\n
In addition to oil, nearly 90 per cent of liquefied natural gas (LNG)\nexported through the Strait is also bound for Asian markets, which\naccounted for around 27 per cent of Asia\u2019s total LNG imports that\nyear.<\/p>\n
Bangladesh, India and Pakistan imported almost two-thirds of their\ntotal LNG supplies via the Strait of Hormuz in 2025.<\/p>\n
\u201cAlmost all Asian countries, in particular India, China, Japan, South\nKorea and several Southeast Asian states are heavily dependent on oil\nand gas imports from the Middle East,\u201d Mr Lawrence Anderson, a Senior\nFellow at the S Rajaratnam School of International Studies (RSIS),\nNanyang Technological University, told CNA.<\/p>\n
Why does Asia bear more of the economic impact than the US?<\/p>\n
A key reason is how differently major economies are positioned in the\nglobal energy system.<\/p>\n
While Asian economies remain heavily dependent on imported oil and\ngas, the US has undergone a major shift over the past decade.<\/p>\n
It is now much less dependent on the Strait of Hormuz than Asia.\nAccording to the US Energy Information Administration (EIA), the US has\nbeen an annual net total energy exporter since 2019.<\/p>\n
\u201cA lot of people still have not realised: In 2016, America overtook\nSaudi Arabia to become the largest oil producer; in 2017, the largest\nnatural gas producer,\u201d said Dr Balakrishnan.<\/p>\n
\u201cBy 2019, America was a net energy exporter - very different from the\ncircumstances five decades ago.\u201d<\/p>\n
What is the Carter Doctrine and does it still matter?<\/p>\n
The Carter Doctrine, announced by US President Jimmy Carter in 1980,\ndeclared that the US would use military force if necessary to defend its\ninterests in the Persian Gulf, particularly to ensure the free flow of\noil through critical routes such as the Strait of Hormuz.<\/p>\n
At the time, the US was heavily dependent on Middle Eastern energy\nsupplies, and disruptions posed a direct threat to its economy and\nsecurity. This strategic imperative shaped decades of US policy in the\nregion, including its involvement in the 1990-1991 Gulf War and the\n2003-2011 Iraq War.<\/p>\n
But that calculus has since shifted.<\/p>\n
\u201cRemember, there was a Carter Doctrine on the importance of the\nStrait of Hormuz for America?\u201d asked Dr Balakrishnan in his interview\nwith Reuters.<\/p>\n
\u201cYou think about the Gulf wars, the strategic calculus and the\ndependence of America on uninterrupted energy supplies is completely\nflipped.\u201d<\/p>\n
In 2024, the United States\u2019 natural gas exports reached a record\nhigh, equal to about 25 per cent of total US energy exports on an energy\ncontent basis, according to the EIA.<\/p>\n
This means that while the US will still be affected by global oil\nprices, it can rely on its domestic production to act as a buffer.<\/p>\n
\u201cAsian countries are so much more dependent on Middle East oil than\nthe US,\u201d said Mr Anderson of RSIS.<\/p>\n
\u201cFor instance, more than half of India\u2019s oil and two-thirds of its\nLNG imports comes from the Middle East; for China, its half of its oil\nand a third of LNG imports; Japan imports 95 per cent oil and 11 per\ncent LNG from the Middle East; for South Korea, 70 per cent of its oil\nand 20 per cent LNG is from the Middle East.\u201d<\/p>\n
Why does the Strait of Hormuz matter more for Asia than for other\nregions?<\/p>\n
In addition to being net energy importers from the Middle East, the\nclosure of the Strait of Hormuz comes at an inopportune time for\nAsia.<\/p>\n
\u201cThis is happening at the time when Asia was hoping to be on a more\nstable footing and getting growth in order, and spreading the fruits of\nthat growth to as many people within your population as possible,\u201d said\nDr Balakrishnan.<\/p>\n
\u201cIt is not coming at a brilliant moment. That is where both the\neconomic and political anxiety are.\u201d<\/p>\n
According to the International Monetary Fund (IMF), Asia now\ngenerates two-thirds of the global GDP growth and accounts for 40 per\ncent of world trade.<\/p>\n
\u201cOil and gas powers the high-energy-consuming Asian economies and\nmanufacturing practices, all of which makes them highly vulnerable to\nthe disruption in the energy supplies from Iran and the Gulf states,\u201d\nsaid Mr Anderson, who was also previously Singapore\u2019s Ambassador to\nCambodia, Saudi Arabia and Bahrain.<\/p>\n
\u201cAnother dangerous concern is I<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/cna-explains-why-asia-will-bear-the-economic-brunt-of-the-iran-war-1774835481", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }