What are the consequences of the US-Israel-Iran war and the Hormuz blockade on gasoline prices and heating costs in Asia?

Rationing, blackouts, record prices: The dramatic domino effect of the Iranian oil blockade

A fictional scenario, but one already thoroughly analyzed in geopolitical simulations, for the year 2026: A coordinated attack by the US and Israel on Iran triggers a devastating chain reaction that plunges the global economy into its deepest energy crisis within a matter of weeks. In retaliation, Iran's Revolutionary Guard blocks the Strait of Hormuz – the geographical bottleneck through which a fifth of the world's oil trade flows. Suddenly, the global market is missing millions of barrels of crude oil every day. The shockwaves of this military conflict race around the globe, hitting the Asian continent with unprecedented force. While countries from Japan to Pakistan strictly ration fuels, factories stand idle, and governments struggle to secure their energy supplies, prices for gasoline, diesel, and heating oil also skyrocket in Europe. Are we witnessing the harbinger of a global energy inferno? The following analysis highlights the dramatic consequences of a Hormus blockage – from disrupted global supply chains and historic price explosions to the tangible impact on the wallets of billions of people.

Asia's Energy Inferno: The US-Israel-Iran War and its Consequences for Oil, Heating and Mobility

On February 28, 2026, the geopolitical landscape of the world shifted within a matter of hours: The United States and Israel launched a coordinated airstrike on Iran, which also killed Supreme Leader Ali Khamenei. Tehran's response followed a logic that had been meticulously planned in military strategists for years, but which they had hoped for decades would never have to face in reality. Iran's Revolutionary Guard closed the Strait of Hormuz – the narrow waterway between the Iranian coast and the Sultanate of Oman, through which some 20 million barrels of crude oil flow daily and on which the entire energy supply of Asia hangs like a heavy fruit on a single, thin branch.

What followed was the most severe energy crisis the world has ever experienced – according to the International Energy Agency (IEA), the “largest supply disruption in the history of the global oil market.” IEA chief Fatih Birol put it with chilling realism in Sydney: During the two oil crises of the 1970s, the world lost around five million barrels per day each time. By mid-March 2026, that figure had already reached eleven million barrels per day – more than both historic oil shocks combined. This number is not an abstract figure. It means: Ships aren't sailing. Factories are standing still. Fuel prices are skyrocketing. And in countries from Sri Lanka to Pakistan, people are having to decide how to use their last liter of gasoline.

The bottleneck and its global weight

The Strait of Hormuz is just 33 kilometers wide at its narrowest point, and the actual shipping corridor for large tankers measures only about 3.7 kilometers. Approximately one-fifth of the world's oil and liquefied natural gas (LNG) trade flows through this narrow strip of water. In 2025, Asia absorbed 87 percent of all crude oil and 86 percent of all liquefied natural gas (LNG) transported through the strait. The share of Asian oil imports transported via Hormuz is around 80 percent. Four Asian countries – China, India, Japan, and South Korea – alone account for 75 percent of the oil and 59 percent of the LNG flows through the strait.

Since the Strait of Gibraltar was effectively closed, the flow of crude oil has plummeted from more than 20 million barrels per day to 3.8 million barrels – less than a fifth of normal levels. At the same time, Saudi oil facilities in Ras Tanura, the Qatari gas processing plant in Ras Laffan, and refineries in the United Arab Emirates were damaged or destroyed by Iranian missile and drone attacks, causing the Gulf states' production to collapse by around ten million barrels per day. The effects are compounding: not only is transportation blocked, but parts of the production infrastructure on the other side of the strait are also in ruins.

Iran itself tactically escalated the situation in the first weeks after the outbreak of war: tankers were attacked with missiles, ships were set on fire, and, according to Iran, the strait was also mined. Several Gulf states had virtually no means of exporting the blocked oil via alternative routes. Only Saudi Arabia and the United Arab Emirates possess limited land-based pipelines that bypass Hormuz. However, these capacities are far from sufficient to replace the lost volumes.

The oil price shock: Dizzying numbers

Before the outbreak of war, the price of Brent crude oil was around $65 to $70 per barrel. In the first weeks after the closure of the Hormuz strait, it climbed to over $119 at times, briefly peaking at $120. In April 2026, following a fragile ceasefire agreement initiated by the US, it fluctuated between $95 and $107 – a decline from its peak, but still around 50 percent above pre-crisis levels. The WTI price was only slightly lower, at around $95 to $105.

These price movements aren't just numbers on a screen – they permeate the entire value chain of modern civilization. Gasoline and diesel are becoming more expensive. Plastic products are becoming more expensive. Food is becoming more expensive because transportation and fertilizer production depend on oil. Shortly before the outbreak of war, analysts at the energy research firm Zero Carbon Analytics had warned of a potential rise in the price of oil to $130 per barrel – comparable to the all-time high of 2008. The Iraqi deputy prime minister had even raised the possibility of prices as high as $300 per barrel.

For heating oil, which remains one of the most important energy sources for many private households, the crisis has meant a doubling of costs in just a few weeks. A price of around nine cents per kilowatt-hour before the war climbed to around 14 cents – an increase of over 55 percent within five weeks. Specifically, 100 liters of heating oil already cost €124 in Germany in mid-March, compared to €99.80 just a short time before. Compared to December 2025, this represents an increase of almost 64 percent. Natural gas for new contracts rose from around 8.5 to 10.8 cents per kilowatt-hour, and European gas prices climbed by up to 18 percent on some days. Before the war, the gas futures price had been around US$30, at times rising to over US$70.

The global response: IEA makes history

The International Energy Agency responded to the crisis with a historic step: On March 11, 2026, its 32 member states decided to release a total of 426 million barrels of oil from strategic emergency reserves – the largest coordinated reserve release in the history of the organization, which has existed for over 50 years. It was only the sixth release of strategic reserves ever. IEA Executive Director Birol also indicated that a further release was being considered in coordination with governments in Asia and Europe.

At the same time, the IEA forecasts the sharpest decline in oil demand since the COVID-19 pandemic for the second quarter of 2026: a drop of 1.5 million barrels per day, driven by price pressure and enforced rationing in large parts of the world. What at first glance sounds like reassurance is in reality a forced reduction in consumption—an economically enforced abstinence that fuels inflation, disrupts supply chains, and risks economic downturns. The UN Economic Commission for Asia and the Pacific expects regional inflation to rise from 3.5 percent in 2025 to 4.6 percent in 2026.

Japan: The most vulnerable giant

Japan tops the Zero Carbon Analytics vulnerability ranking: The country's energy mix is ​​almost 90 percent dependent on imports, the majority of which come from the Middle East. Nearly all crude oil and gas shipments pass through the Strait of Hormuz. Furthermore, Japan possesses no significant natural resource reserves of its own – it is structurally dependent on a single trade route.

Prime Minister Sanae Takaichi reacted immediately: She ordered the release of approximately 80 million barrels from the strategic oil reserves – enough for about 45 days of national consumption. A second reserve release followed in April. Coal-fired power plants were ramped up, and Australia was asked to increase its LNG production. At the same time, Japan concluded an energy cooperation agreement with Indonesia and joined the LNG exchange program jointly pursued by South Korea and Japan.

Takaichi found himself in a unique diplomatic dilemma: US President Trump publicly urged Japan to participate militarily in the operation to open the Strait of Hormuz and to send its own warships into the country – pointing out that the US had stationed 54,000 troops in Japan to protect it from North Korea. Takaichi invoked the Japanese constitution, which severely restricts military involvement abroad, and rejected the request. This signaled a deeper political upheaval: in times of crisis, energy, military might, and alliance loyalty are inextricably intertwined.

South Korea: Between price caps and nuclear power

South Korea shares with Japan the fate of extreme import dependency: almost all crude oil shipments come from the Middle East and pass through the Strait of Hormuz. The result is a twin shock – supply disruptions and price explosions simultaneously. The government in Seoul reacted decisively: for the first time in almost 30 years, a fuel price cap was introduced, coal and nuclear power plants operated at increased capacity, and Seoul passed an additional budget of US$17 billion to mitigate the effects of the crisis.

At the corporate level, four South Korean energy companies organized a crude oil swap system, securing approximately 20 million barrels of oil to be delivered by the end of June. Korea Gas Corporation and Japan's largest electricity producer, JERA, concluded an agreement on mutual LNG supply guarantees and swap deliveries. For South Korea's peninsula, with its energy-intensive industries—from steel production to semiconductor manufacturing—the crisis is therefore existential: no energy means no manufacturing, and no manufacturing means the loss of export market share in an already volatile global trade environment.

China: The strategic special case

China's dependence on the Strait of Hormuz makes it both vulnerable and privileged. On the one hand, the Gulf supplies between 40 and 80 percent of China's crude oil imports, and around a third of its LNG imports also come from there. On the other hand, China possesses trump cards that no other Asian country has.

The most important of these are its strategic oil reserves: China has stored around 1.3 billion barrels of crude oil. Based on the country's total oil imports, this reserve would last for about three to four months – but based solely on the loss of Gulf imports, it would last for eight to nine months, almost a full year. Furthermore, in 2025, China purchased more than 80 percent of all Iranian exported oil and maintains close ties with Tehran despite the war. In mid-March 2026, Iran began allowing passage to selected ships from countries deemed "friendly" – including China. On March 31, three Chinese ships passed through the strait.

In parallel, China immediately banned the export of refined fuels such as gasoline, diesel, and kerosene to prevent domestic shortages. Gasoline prices at Chinese pumps have risen by around 20 percent since the start of the war, but have been capped by government price limits. Furthermore, China increased pipeline imports from Russia and used sanctioned Iranian and Russian oil as a cheap buffer. However, analysts at the Kpler energy research institute warned that Iranian oil in transit could not fully compensate for the losses from the Middle East. While China is in a better position than its neighbors, Beijing is also under enormous pressure.

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India: The sleeping giant under price shock

With nearly 1.5 billion people, India is particularly vulnerable to energy shocks, which directly impact food prices, transportation costs, and the daily lives of its population. The country imports around 90 percent of its crude oil and almost three-quarters of its liquefied natural gas – the majority of it via the Strait of Hormuz. Nearly 48 percent of its crude oil imports come from Iraq, Saudi Arabia, the United Arab Emirates, Kuwait, and Qatar – all countries whose trade routes cross the strait.

Immediately after the outbreak of war, the government invoked emergency powers and redirected liquefied natural gas (LNG) supplies from industrial consumers to households – a clear signal that heating homes and cooking were the priority. Indian refinery operators initially anticipated sufficient stockpiles for 10 to 15 days, supplemented by strategic reserves for another seven to ten days. The longer-term option: Russia. India had previously reduced its purchases from Moscow under US pressure – now it was clear that this option would be revisited should the crisis persist. The problem: Russian oil takes approximately 30 days to reach India by sea, while Arab oil takes only five days. Switching sources requires proactive planning and lead time. Several international banks revised their growth forecasts for India downwards.

South and Southeast Asia: Rationing as the new normal

While the economically stronger countries in the region were able to draw on reserves, cooperation and state aid, the poorer and structurally weaker countries of Southeast and South Asia experienced a far more brutal version of the crisis.

Sri Lanka, which had only just survived a devastating economic crisis a few years earlier, reintroduced a QR code-based fuel allocation system: private drivers were limited to 15 liters of gasoline per week. Schools and universities switched to a four-day week. Pakistan, which obtains around 85 percent of its oil and LNG imports through the Strait of Hormuz and has reserves for only 10 to 14 days, reacted with drastic measures: schools and universities were closed for two weeks, a four-day work week was introduced, 50 percent of government employees were sent to work from home, fuel allocations for government agencies were halved, and a 200 percent surcharge was imposed on high-octane gasoline. Warships were dispatched to escort Pakistani merchant vessels through the dangerous strait.

Bangladesh experienced prolonged power outages of five hours a day, shut down fertilizer factories due to gas shortages, introduced fuel rationing, and moved universities and schools entirely online. Myanmar implemented a strict rationing system based on even and odd license plate numbers: vehicles with odd numbers could refuel one day, those with even numbers the next. Cambodia, which has no domestic refining capacity and is 100 percent dependent on imports, had to close more than 2,000 gas stations. The Philippines declared a national emergency and introduced a four-day workweek for government employees.

Thailand, which sources around 57 percent of its oil from the Middle East, suspended all petroleum exports and imposed diesel price caps. The price of diesel rose from 29.94 baht per liter in February to a peak of 50.54 baht on April 7 – an increase of nearly 70 percent in less than six weeks. For Thailand's fishermen and farmers, who depend on affordable fuel for their livelihoods, this was an economic cataclysm. Vietnam, with reserves for less than 20 days, allowed civil servants to work from home and tapped into a state fuel stabilization fund. Indonesia began directly rationing fuel on April 1 and suspended free school canteen services one day a week – a measure that highlights the social dimensions of the crisis.

Heating, household, everyday life: The invisible front

The effects of the conflict are not merely macroeconomic distillates from commodity markets and government budgets. They directly impact the daily lives and heating costs of millions of private households. In Asia, where many countries rely on liquefied petroleum gas (LPG) and heating oil, the crisis initially means rising prices, then shortages, and finally – in the poorest regions – the simple unavailability of fuel.

In Nepal, which imports almost all of its energy from India, citizens waited in long lines for gas cylinders in mid-March – which were only being dispensed half-full. India itself redirected LPG from industrial users to private households via an emergency decree, which temporarily secured supplies for cooking and heating, but caused serious production bottlenecks for industrial plants. In Pakistan, households risked running out of fuel despite government price controls because gasoline prices rose by around 20 cents per liter.

Heating systems in Asia are structurally different from those in Europe: In most South and Southeast Asian countries, households primarily heat with bottled LPG – for cooking and occasional heating during colder months. The price shock therefore doesn't affect home heating in the Western European sense, but rather primarily the daily energy required for cooking. A doubling of gas bottle prices in Pakistan or Bangladesh can have existential consequences for poor families, as energy represents a disproportionately large share of the household budget.

Rationing: Who, how, and why now?

Historically, rationing has been a last resort – deployed when price mechanisms alone threaten to jeopardize social cohesion and when state control of distribution becomes the only alternative. In the current crisis, rationing has been introduced in at least ten Asian countries.

The IEA emphasized that road transport accounts for around 45 percent of global oil demand – which is why fuel rationing is considered a particularly effective means of saving fuel. The systems vary considerably: Sri Lanka and Bangladesh use digital QR code systems that manage individual weekly allowances. Myanmar and other countries rely on the classic license plate model. Cambodia simply reduced the number of open petrol stations. Singapore, which despite its enormous refining capacity is suffering from high raw material costs due to the Hormuz crisis, has so far refrained from formal rationing but has faced the problem of massively increased crack spreads for diesel, petrol, and kerosene.

The crucial question for many governments is: When is official rationing necessary, and when is it too politically risky? In authoritarian states like Myanmar, implementing rationing systems is technically simpler – in democracies like India or the Philippines, it carries significant social and political risks. For the time being, India has opted for the LPG diversion: not a formal rationing system, but a prioritization of households over industry – a de facto rationing under a different name.

Diplomatic scene: Who negotiates, who blocks, who wins?

On April 13, 2026, Trump confirmed the initiation of a US naval blockade of Iranian ports in the Strait of Hormuz. At the same time, he stated that Iran wanted to reach a deal – although Iranian officials did not publicly confirm this. Peace negotiations in Islamabad had previously failed, with Pakistan acting as a potential mediator.

China responded to the US blockade with a strong verbal rebuttal: Beijing demanded that the Strait of Hormuz be kept "stable, secure, and unobstructed" and resisted US pressure to halt energy imports from Iran. Iran, meanwhile, selectively allowed passage to ships from "friendly states"—including China, Egypt, Pakistan, and South Korea. This two-tiered maritime system is both a diplomatic tool and an economic weapon: Iran can selectively reward and punish.

Japan faced a particularly uncomfortable dilemma: despite its economic vulnerability and despite US pressure, Tokyo refused military participation in the Hormuz operations, citing its constitution. Trump's public criticism of Japan and South Korea for this marks a new dimension in the alliance between the US and its Asian partners—a dimension that could permanently damage geopolitical trust.

The European Canal: Western gasoline flows eastward

The crisis in Asia predictably created a pull effect on global fuel markets: at least three European gasoline shipments, totaling around 1.6 million barrels, were diverted from Europe to Asia within a week. Normally, the US, South America, and West Africa are the main recipients of European fuel exports. Asia is structurally a net importer of refinery products from the region – but profit margins in Asia now exceed those of all other markets. Gasoline crack spreads in Singapore, the regional oil trading hub, climbed to around US$37 per barrel – near the historical highs of 2022. ExxonMobil booked gasoline shipments from the US to Australia.

This diversion of fuel flows signals a functioning market – but at high cost and under systemic pressure. For countries like Vietnam, Cambodia, and Nepal, the relocation of refinery products from neighboring countries exacerbates shortages, as regional suppliers such as South Korea and Singapore reduce or completely halt their own exports.

A crisis that should not have come as a surprise

The current catastrophe has exposed an uncomfortable truth: despite decades of diversification efforts, despite the building up of strategic reserves, and despite international warnings about the vulnerability of Asian energy systems, structural dependence on the Strait of Hormuz has not decreased significantly. On the contrary: as Asian economies grew, so did their absolute energy demand – and thus their dependence.

While renewable energies have gained considerable importance, they still fall far short of covering the baseload energy demand of the major Asian industrialized nations. The OPEC World Oil Outlook 2024 documented that global primary energy demand is met by fossil fuels to the tune of approximately 80 percent, with oil accounting for 30 percent and gas for 23 percent. These figures are even more pronounced in Asia – and structural alternatives are even less developed. Europe can serve as a point of comparison: Between 2022 and 2024, it reduced its gas imports by 18 percent – ​​a process that, however, unfolded over several years and was made possible by substantial investments.

The 2026 crisis could become a turning point – not despite, but because of its brutality. In Japan, South Korea, India, and the Southeast Asian countries, political pressure for an accelerated expansion of renewable energies, a rehabilitation of nuclear power, and a serious diversification of energy sources will increase dramatically. The question is whether this political will can be translated into structural investments before the next crisis hits. The opportunity to seize this learning opportunity has never been more urgent.

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