Overview
- Disruption from the US–Iran war has tightened oil flows through the Strait of Hormuz, which carries about one‑fifth of global supply, creating uneven pressure across Asian economies.
- The Asian Development Bank cut its 2026 growth outlook for developing Asia to 4.7% and raised inflation projections, pointing to higher energy costs and costly subsidies.
- Reported oil arrivals to Asia fell about 30% year over year, and a shipping backlog of roughly 1,000 vessels is slowing deliveries of fuel and industrial inputs.
- Richer economies such as Japan, South Korea, and Singapore can defend currencies and subsidize fuel, with Japan spending about $35 billion to support the yen as energy costs bite.
- Lower‑income, import‑dependent countries including Pakistan, Bangladesh, and Sri Lanka face rising subsidy bills, weaker currencies, and reserve strain, and investors are shifting toward markets with larger buffers and more diverse supply lines.