"Restaurants Close as Cooking Fuel Runs Out... Fears of COVID-19-Level Shock [Global Focus]"

The closure of the Strait of Hormuz due to the Iran war has triggered an energy crisis across Asian countries. People are now waiting for hours to refuel, and some restaurants are closing due to a shortage of cooking fuel, signaling the collapse of daily life and economic stability. The impact is spreading rapidly throughout various industries. In response to this energy bottleneck, countries like the Philippines have declared a state of emergency. Foreign media have expressed concern that this energy crisis could leave a shock comparable to the COVID-19 pandemic.

Disruptions to Daily Life Caused by the Iran War

The Bangladeshi government has recently implemented austerity measures such as temporary university closures, restrictions on fuel sales, and the suspension of fertilizer plant operations. Disruptions in crude oil supply have forced drivers to travel to other regions or wait for hours to refuel. Bangladesh relies on imports for 95% of its crude oil needs.

In India, some restaurants have stopped serving fried foods such as samosas due to unstable liquefied petroleum gas (LPG) supply. According to local media citing market estimates, around 5% of restaurants are temporarily closed or have gone out of business. Frying food is difficult with alternative appliances like induction cookers. India is the world's second-largest consumer of LPG, using 33.15 million tons last year for cooking alone. Imports accounted for 60% of total demand, and about 90% of those imports came from the Middle East.

Recently, Philippine President Ferdinand Marcos signed Executive Order No. 110 to respond to the energy emergency. He explained, "The risk of a severe energy supply shortage is imminent," and added, "Urgent measures are needed to ensure the security and adequacy of the national energy supply." The Philippines relies on the Middle East for more than 90% of its crude oil imports.

Peter Mumford, head of Southeast Asia at Eurasia Group, told Bloomberg that "the region is highly exposed to prolonged conflict and global energy price shocks," and added that there are growing concerns about secondary and tertiary economic impacts, including flight cancellations, suspension of fishing operations, and damage to the tourism industry.

Other countries are taking similar actions. Nations with high dependence on Middle Eastern crude oil, such as Thailand and Pakistan, have implemented energy-saving measures like adjusting working hours and expanding remote work. Some countries have responded with even stricter measures, such as fuel rationing.

Impact Beyond Daily Life: Industrial Ripple Effects

The shockwaves are also being felt across industries. South Korean and Japanese petrochemical companies are cutting production as naphtha supply becomes unstable. Naphtha, often referred to as the "rice of industry," is a fundamental material for petrochemical products derived from crude oil. It is used as a raw material for a wide range of products, including plastics, synthetic fibers, fertilizers, and synthetic rubber.

LG Chem’s Yeosu plant suspended operations at its No. 2 naphtha cracking center (NCC), which has an annual capacity of 800,000 tons, starting on March 23 due to disruptions in naphtha imports. In particular, South Korea has imposed export restrictions in response to the naphtha supply emergency.

Japan has also begun reviewing its entire petroleum-related product supply chain. According to the Nihon Keizai Shimbun (Nikkei), Japanese chemical companies have reduced petrochemical production as crude oil and naphtha procurement became difficult following the de facto blockade of the Strait of Hormuz. Mitsubishi Chemical, Japan’s largest chemical company, has lowered the operating rate of its naphtha steam cracker. About 60% of Japan’s naphtha is imported, with 70% of those imports coming from the Middle East. Even naphtha produced domestically in Japan is based on Middle Eastern crude oil, meaning that approximately 80% of Japan's total naphtha supply is dependent on the Middle East.

If the shortage of naphtha at petrochemical plants persists, Japan’s industrial natural gas consumption may also decrease. Shinichi Sasayama, President of Tokyo Gas, said in a press conference, "Many of our customers use naphtha or other petroleum products in their manufacturing processes. If they reduce production or operations, it could affect our gas sales as well." The reduction in petrochemical production may lead to lower energy demand, placing additional pressure on the manufacturing sector as a whole.

Conversely, coal, which had been sidelined by the energy industry, is once again drawing attention. China is effectively maintaining and expanding its coal industry for energy security reasons. The country is developing industries that convert coal into chemicals and fuel in a bid to reduce dependence on imported crude oil and gas. Analysts say that the uncertainty in energy supply caused by the Iran war is likely to further strengthen this trend.

In particular, investors believe that the Iran war will further increase dependence on the coal industry. Guolian Minsheng Securities stated in a report, "Rising chemical product prices are expected to improve the performance of coal chemical companies. If the pace of new project approvals speeds up, this will also positively impact corporate value."

The Nightmare of COVID-19 Returns

As the impact of the energy crisis grows, the International Monetary Fund (IMF) has reportedly begun scenario analysis to assess whether additional financial support is needed for various national economies in preparation for a prolonged Iran war. The IMF has previously warned that sustained rises in energy prices could drive global inflation and slow economic growth.

Indian Prime Minister Narendra Modi recently expressed concern about the Iran war in a parliamentary speech. He stated, "This war could prolong difficult global conditions," and emphasized, "We must respond with unity as we did during the COVID-19 pandemic." His reference to COVID-19 in the context of crisis response reflects the seriousness of the current situation.

Some experts warn that if instability in energy supply worsens, Asian countries could experience a shock similar in scale to that of the COVID-19 pandemic. Barclays, in a report, noted that "past experiences with debt repayment deferrals, fiscal regulation easing, and currency issuance provide a kind of policy manual for responding to similar situations," and explained, "Depending on the severity of the situation, emerging Asian countries may implement lockdown-level restrictions on economic activity, drawing on the policy responses used during the pandemic."

This content was produced with the assistance of AI translation services.