Asia is staring down the barrel of a severe energy “drought” as the prolonged closure of the Strait of Hormuz threatens to cut off the continent’s primary supply of oil and gas, industry leaders have warned MPs in London. While immediate physical shortages have yet to bite due to shipping transit times, officials testified that the region can now see a perilous gap on the horizon with no clear end in sight.
Why Asia Faces the Deepest Pain
The stark warning from Equinor’s UK country manager, Alex Grant, underscores a fundamental vulnerability. Asia’s economic engine is uniquely dependent on the narrow waterway. In 2024, approximately 80% of oil exports from Gulf nations were destined for Asian countries. The strait itself is a jugular vein for global energy, carrying roughly a third of all seaborne crude oil and about 20% of the world’s traded liquefied natural gas (LNG).
The scale of dependence varies by nation but paints a picture of continent-wide exposure. China, the world’s largest crude importer, receives 6.5 to 7.5 million barrels per day through the strait, accounting for up to 45% of its total imports. For Japan, the dependency is around 90% of its oil needs. India imports 60-65% of its oil via the route, while South Korea takes 75% of its crude imports this way. Pakistan is considered the most exposed economy, with the majority of its energy imports flowing from the Gulf.
This reliance has forced immediate crisis measures. Japan has released 80 million barrels from its strategic petroleum reserves. China and India have implemented domestic price controls and boosted local production to cushion consumers. Pakistan has ordered schools to close for two weeks and slashed fuel allocations for government vehicles.
The LNG market has been hit with parallel force. Qatar, the world’s second-largest LNG exporter, has been forced to shut down production as its shipments cannot exit the Gulf. With 93% of Qatar’s and 96% of the United Arab Emirates’ LNG exports transiting the strait—accounting for 19% of global trade—benchmark Asian LNG prices jumped almost 39% in early March.
Equinor’s Fleet in the Crossfire
The global nature of the disruption was highlighted by evidence from Norwegian state energy firm Equinor, a major supplier to Europe. Alex Grant told the Energy Security and Net Zero Committee that the company has felt the impact directly. “We have a fleet of around 80 vessels at any one point – we have vessels that are caught up in the Gulf situation,” he said.
Grant emphasised the pervasive uncertainty, stating, “I have no better view than anyone else on when the straits will reopen.” He outlined the looming crisis for Asia: vessels take around 25 days to sail from the Gulf, so arrivals are continuing for now. “But they can see on the horizon a big drought. Suddenly nothing coming. And they don’t know when that tunnel ends because they haven’t seen the straits reopen.”
The closure was triggered by a sharp escalation in the Gulf following joint US-Israel military strikes on Iran on February 28, 2026, and subsequent Iranian retaliation. Iran’s Islamic Revolutionary Guard Corps (IRGC) issued warnings prohibiting vessel passage, effectively halting traffic. This led to a rapid militarisation, with the United States Armed Forces beginning a campaign to reopen the strait on March 19. The security situation has deteriorated so severely that the Norwegian Maritime Authority has prohibited Norwegian-flagged vessels from transiting the strait due to critical security concerns.
By March 25, only nine vessels had reportedly made the journey through, with approximately 400 ships waiting outside. Since the crisis began, Iran has conducted 21 confirmed attacks on merchant shipping.
A Split Market and Historic Shock
The testimony revealed a world energy market splitting under the strain. Alan Grant, senior vice president at consultancy Wood Mackenzie, told MPs the war had created the “worst supply shock there’s ever been” in terms of crude oil, estimating the current shortfall at close to 20% of global supplies. “What the markets are very much focused on is what is flowing out of the straits – we’re seeing refiners in Asia scrambling to secure supply and countries in Asia try and manage demand,” he said.
He drew a sharp contrast between regions. “At the moment, refiners in Europe are doing quite well because product prices have really lifted compared to crude,” he explained. The opposite is true in Asia. “Refiners in Asia, not at all – they’re competing so hard for the crude that’s available, they’re kind of destroying their earnings.”
The financial and physical market turmoil is profound. Oil prices surged to nearly $120 a barrel, with Brent crude surpassing $100 on March 8 for the first time in four years and peaking at $126. War-risk insurance premiums for vessels have surged more than tenfold. The disruption is also choking exports of fertilizer inputs, petrochemicals, and materials like aluminium, affecting manufacturing sectors from automotive to electronics.
Limited mitigation efforts are underway. Saudi Arabia is rerouting some oil via its East-West pipeline to the Red Sea, and the UAE is using its bypass pipeline, yet even Saudi Arabia has had to cut supplies to Asia. Alternative sources, such as exploring Kazakh oil for Japan or Turkmen gas via the Southern Gas Corridor, face logistical hurdles that would take years to overcome, leaving strategic reserves and demand rationing as the primary short-term tools.
Iran has rejected a US de-escalation proposal, setting five conditions for peace that include international recognition of its control over the Strait of Hormuz—a demand that underscores the enduring geopolitical stakes of the crisis. The international legal right of transit passage through such straits, enshrined in the UN Convention on the Law of the Sea, is now at the centre of a military and economic standoff with global consequences.
