Asian economies are beginning to feel the first severe impacts of the near-paralysis of Persian Gulf oil and gas exports, with economic growth slowing significantly and likely to worsen further in the coming months. Some countries have already fallen into stagflation, and the overall outlook is not optimistic.

Asia's total oil imports come from the Persian Gulf countries, a high degree of dependence that made it particularly vulnerable to the supply shock that was almost entirely unexpected. Now that the shock has become a reality, Asia is paying the price for its heavy reliance.

A sharp decline in oil imports means that increased US oil production is unlikely to make up for the shortfall.

Kpler data shows that Asian oil imports last month were down 30% compared to April 2025. Although imports from the United States are increasing significantly, they are still insufficient to fill the huge gap left by the freeze in Middle Eastern oil supplies.

According to Kpler data, U.S. exporters shipped an average of 2.27 million barrels of crude oil per day to Asia in April, and this figure is expected to rise to 3.29 million barrels per day in May. However, Middle Eastern oil shipments to Asia averaged only 14.8 million barrels per day in April, a significant drop from the March average of 18.63 million barrels per day. In other words, Middle Eastern imports decreased by approximately 4 million barrels per day, while U.S. imports increased by only about 1 million barrels per day.

Asia is also increasing its crude oil imports from Russia, facilitated by the US extending related sanctions waivers. This demonstrates that Washington is fully aware of the impact of the Middle East conflict on global energy security and domestic fuel prices in the US.

Growth expectations revised downwards, inflationary pressures rise

Despite this, global oil supply is still insufficient to fully fill the gap, leading several forecasting agencies to lower their growth forecasts. The Asian Development Bank recently lowered its economic growth forecast for the Asia-Pacific region from 5.1% to 4.7%, while raising its inflation forecast, expecting the region's average inflation rate to reach 5.2% this year.

The International Monetary Fund (IMF) is also not optimistic. IMF economist Andrea Pescatori said last month: "Asia got off to a strong start in early 2026, but the Middle East conflict and the resulting energy supply shocks are pushing up inflation, weakening external balances, and narrowing policy space, highlighting the region’s heavy dependence on imported oil and gas."

Different countries have varying degrees of vulnerability, limiting the effectiveness of corresponding measures.

While Asia as a whole is highly dependent on energy imports from the Middle East, different economies have been affected by supply shocks to varying degrees. Poorer Asian countries are the first to face the predicament of running out of options, as limited financial resources have prevented them from building sufficient oil reserves to cope with the crisis like their wealthier neighbors. Several Southeast Asian countries have begun implementing energy austerity measures, with the Philippines even declaring a national energy emergency.

The Asian powerhouse currently possesses over 1 billion barrels of oil reserves, with a more diversified supply source, including Iran and Russia, a stark contrast to European importers. It has also swiftly implemented measures to restrict fuel exports, prioritizing domestic supply. Japan, with its massive oil reserves of approximately 400 million barrels, ranks among the world's largest and has begun releasing reserves to control domestic fuel prices.

Other Asian countries have also taken various measures, but most of these measures are difficult to sustain in the long term. Working from home, fuel subsidies, and the release of strategic oil reserves are only short-term relief measures. Subsidy policies also carry significant risks, as they can rapidly deplete government fiscal reserves and limit the government's ability to intervene in other areas.

Some countries have begun implementing fuel rationing, while countries like Japan and Australia are adopting long-term energy security plans and seeking solutions through energy cooperation agreements. However, the pressing issue of an overall insufficient oil supply remains. If the conflict continues for months, a natural demand-destroying phenomenon may eventually occur: demand will shrink on its own as prices become increasingly unaffordable for more and more consumers.

Economic outlook under pressure, recovery faces challenges

From an economic perspective, contracting consumption means contracting economy. This outlook has prompted institutions such as Goldman Sachs to lower their growth forecasts for Japan and parts of Southeast Asia. While Goldman Sachs analysts point out that the impact of the Middle East conflict on Asia has not yet reached its worst expectations, they also raise the question: "How much of the resilience currently being shown comes from structural factors, and how much from the depletion of unsustainable buffer inventories?" The answer may soon be revealed.

Overall , the energy crisis triggered by the Middle East conflict has posed a substantial threat to the Asian economy. In the coming months, the ability of Asian countries to effectively balance energy security, economic growth, and inflation control will directly determine whether the regional economy can smoothly weather this challenge.