Market News

BANGKOK (AP) — The escalating war with Iran is pushing parts of the world into energy triage, forcing governments to choose where to cut demand or absorb costs, while prioritizing dwindling supplies.

Asia is the most exposed since it relies heavily on imported fuel, much of it shipped through the now-blocked Strait of Hormuz. The narrow passage offshore from Iran is the main route for shipping a fifth of global trade in crude oil and liquified natural gas.

Governments in the region are scrambling to adjust — tallying oil reserves, conserving energy, competing for supplies and trying to blunt prices. That brings difficult trade-offs: saving power may slow business activity. Prioritizing cooking gas for households can hurt restaurants and other businesses.

“Even relatively modest constraints on energy use can create a drag on industrial activity,” said Linh Nguyen, with the consultancy Control Risks. She pointed to Vietnam’s energy-intensive export industries and warned that higher fuel costs or conservation measures could quickly raise production costs or slow factory output.

Analysts warn the same hard choices could soon spread beyond Asia to fuel-importing economies in Africa and elsewhere as countries compete for scarce supplies.

“The situation is common across the board,” said Putra Adhiguna of the Jakarta-based Energy Shift Institute. “There is no easy decision for the short term.”

Southeast Asia is rationing scarce energy

With oil prices surging despite releases of some reserves, Southeast Asia is stretching dwindling energy reserves by urging households, businesses and government agencies to slash power use.

In the Philippines, officials have switched to a four-day workweek to cut back on fuel consumption and reduce the government's energy use by a fifth. Offices have been told to switch off computers during lunch breaks and keep air conditioning no lower than 24°C (75°F). Vietnam has urged people to work from home. While in Thailand, the prime minister has even asked officials to take the stairs instead of elevators.

But this comes at a cost.

Dieu Linh, a vegetable seller in Hanoi, said even a 10% rise in fuel costs will eat into her thin margins. “If my costs go up by even a little, the profit is almost gone,” she said.

At the same time, countries in the region are competing for limited supplies at higher costs.

Vietnam has asked refineries and fuel distributors to keep fuel supplies high, while Thailand is stretching its roughly two-month oil reserve and seeking other domestic energy sources. Both are using price supports to shield households from rising costs.