The closure of the Strait of Hormuz due to the conflict with Iran is rapidly reshaping the global energy landscape. This event has not only directly impacted Asia, which relies on Middle Eastern oil supplies, but has also sounded alarm bells for European and African countries. Economists generally believe that the current factory production cuts and gas station rationing in Asia are harbingers of the difficulties that Europe and other regions may face in the future. As global oil supplies decline significantly, the chain reaction of energy shortages is gradually emerging, testing the response capabilities of governments and the resilience of their economies.

Global oil supply is severely constrained

According to data from Oxford Economics, Iran's blockade of the Strait of Hormuz has reduced global oil supplies by approximately 10% compared to pre-war levels. This crucial strait is not only a vital artery for oil transport but also a key route for liquefied natural gas (LNG), which many countries rely on for power generation and fertilizer production. Supply disruptions have not only driven up energy prices but have also directly impacted industrial production and agricultural security.

The outbreak of war has exacerbated supply bottlenecks due to transportation delays and potential damage to key energy facilities in the Gulf region. US President Trump stated last Wednesday that the US military operation in Iran could end in about three weeks, but even if the fighting concludes, Iran may not immediately reopen the Strait of Hormuz. The restoration of transportation and logistics takes time, and facility repairs are a complex process, meaning the impact of energy shortages will be prolonged.

Asia was the first to bear the brunt of the supply shock.

Due to their geographical proximity to the Gulf region, Asia and the wider Pacific region were the primary victims of this oil shockwave. Most of the energy ships en route at the beginning of the war had already arrived at Asian ports, causing the region to feel the pressure of supply constraints more quickly. More worryingly, many Asian countries have relatively low levels of domestic energy reserves. While countries like Japan, China, and South Korea possess some buffer reserves, overall they are still insufficient to completely offset external shocks.

Specifically, the Indian government has reduced its supply of liquefied petroleum gas (LPG) to factories to 70% of pre-war levels, directly impacting production in industries such as steel, automobiles, textiles, and plastics. The Bangladeshi government has shut down most plants using natural gas to produce urea fertilizer, a move that could pose a potential threat to future food security. Indonesia, a major nickel producer, implemented a daily fuel cap of 50 liters for drivers this week to control consumer demand.

At the price level, although Asian oil prices rose by 53% in the past month, countries have kept domestic fuel price increases to around 16% through measures such as reducing fuel taxes and road taxes or providing cash subsidies. However, while this price-suppressing approach supports demand, it may further exacerbate shortages. Poorer countries, with limited funds, cannot sustain such buffer policies in the long term. The Pakistani government has already raised gasoline prices by 46% and diesel prices by nearly 90%, and Federal Oil Minister Ali Pervez Malik has made it clear that the country must strive to avoid falling into a similar default predicament.

Furthermore, Australia's experience is also noteworthy. Prime Minister Anthony Albanese pointed out that the economic impact of the war will last for months. Australia has begun publishing weekly national fuel inventory data, and as of March 31, the country had enough petrol for 39 days, diesel for 29 days, and jet fuel for 30 days. The Prime Minister urged the public to prioritize public transport to preserve fuel supplies for critical industries such as mining and agriculture. Some petrol stations have implemented purchase limits, and hundreds of stations have reported running out of at least one type of fuel in recent days, which officials attribute to panic buying.

Europe faces increasingly looming energy risks.

Asia's predicament is gradually spreading westward, with Europe and many African countries in a precarious position. Unlike the United States, a net energy exporter, Europe is heavily reliant on imports from the Middle East, where gasoline prices have risen by 15%, diesel by 30%, and natural gas by over 50%. Most energy shipments that departed from the Gulf region before the war have now arrived in Europe, but several tankers have diverted their cargo to higher-paying Asian markets, further squeezing European supplies.

According to data from Société Générale, Europe had a buffer of approximately 450 million barrels of oil and refined products at the beginning of the crisis. However, as these reserves were gradually depleted, national leaders have begun to shift towards reducing demand to address the challenges. EU Energy Commissioner Dan Jorgensen stated clearly, "The more we can do to save oil, especially diesel and aviation fuel, the better off we are." He also pointed out that Europe is in a potentially worsening situation, making demand reduction a necessary measure.

Real-world examples are already emerging. In Slovenia, a wave of panic buying and "cross-border refueling" from neighboring countries led to some gas stations running out of fuel, prompting the government to implement fuel purchase restrictions. Local guide Kristina Topalovic described the situation: "Most gas stations were sold out; some places only had gasoline, no diesel." Many people checked websites for gas stations still having fuel, and fortunately, the situation has eased somewhat. Gas stations in Slovakia and Hungary, on the other hand, charged higher prices to cross-border drivers to protect local supplies.

Europe imports relatively little liquefied natural gas and crude oil from the Gulf region, but is highly dependent on petroleum products such as jet fuel supplied by the area. Ryanair CEO Michael O'Leary warned that the aviation industry could face jet fuel shortages by May. Furthermore, analysts at JPMorgan Chase pointed out that supply disruptions could also occur on the US West Coast by then, particularly in California, where gasoline prices are approaching $6 per gallon. The region, reliant on imports, is competing with other regions for dwindling global supplies.

Global Response to Challenges and Long-Term Implications

Faced with this situation, most governments are using various means to buffer price shocks, including tax cuts and subsidies. However, artificially suppressing prices during a supply crisis could also prop up demand and exacerbate shortages. Poorer countries, with limited fiscal capacity, cannot sustain such measures in the long term, further highlighting the fragility of the global energy system.

The Australian Prime Minister's statement is perhaps the most representative: the economic shock will last for months, not just a short-term fluctuation. This event serves as a reminder to all countries that they must strengthen energy reserves, diversify supply sources, and promote energy conservation, emission reduction, and the development of renewable energy to enhance resilience in similar crises.

Overall, the oil shock triggered by the Iran war has spread from Asia to Europe and wider regions. Current production cuts, purchase restrictions, and price controls in Asia serve as a real warning to Europe and other areas. Only through international cooperation and forward-looking policies can countries effectively alleviate shortage pressures and maintain economic stability and people's well-being. This crisis not only tests the present but will also profoundly influence the future trajectory of the global energy landscape.