Governments across Asia are working to stave off a second major energy crisis within six months as a new maritime blockade in the Middle East threatens the free movement of Gulf oil. With the Bab al-Mandab strait—the southern entrance to the Red Sea—now effectively blocked by Yemen's Houthi movement, nations including Japan, the Philippines, Thailand, and South Korea are scrambling to secure vital energy imports. These countries rely on Middle East oil for up to 90% of their total imports.
The region is still recovering from the disruption caused by the closure of the strait of Hormuz in March, which forced nations to compete for dwindling crude supplies. Ahmed Helal, an analyst from the Asia Group thinktank, noted that global reserve capacity is being stretched to its limits, stating that countries are essentially scraping the bottom of the barrel with very little inventory remaining. The pressure of rising import costs has already triggered inflation, placing significant strain on regional powers like Japan and Indonesia.
To mitigate the impact, Saudi Arabia had previously rerouted much of its crude exports to the Red Sea port of Yanbu after the Hormuz disruption, which now handles more than 70% of Riyadh’s crude oil exports. However, this lifeline is now under threat. The Houthis have targeted at least two Saudi oil tankers in the last week and launched attacks on Saudi oil infrastructure, leading to a significant drop in vessel traffic through the Bab al-Mandab strait. Commodity research director Matt Smith of Kpler noted that the change in tanker behavior signals that the shipping industry is taking the threat seriously. Consequently, war risk premiums for tankers have reportedly doubled in the past week, adding significant costs that will inevitably be passed on to Asian consumers.
Some refiners in Japan and South Korea are exploring alternative routes, such as sending cargo north through the Suez Canal toward the Mediterranean and around the Cape of Good Hope. However, these options are logistically difficult and expensive. Large oil tankers, specifically VLCCs, cannot traverse the Suez Canal while fully loaded, requiring them to offload half their cargo into Egypt's Sumed pipeline before reloading on the Mediterranean side. Furthermore, rerouting around Africa would more than double transit times.
The current situation has spurred the Philippines, India, and South Korea to bolster their strategic energy reserves, while also accelerating interest in renewable energy transitions. As governments look for immediate solutions, there is a growing fear of business closures and potential defaults. Experts suggest that the current chaos highlights a dangerous vulnerability in Asian energy systems, forcing a long-overdue reckoning regarding supply chain resilience and storage capacity. For now, however, as Helal observed, there is very little left in the tank for these nations to rely on.
Insurers have responded in kind, with war risk premiums paid by tankers reportedly doubling in the last week, potentially adding hundreds of thousands of dollars to the cost of a voyage.
“Businesses are going to have to close. You might have attempts to reduce consumption at peak hours. And you might have, in some extreme cases, higher risk of default,” says Helal.
