Economic Watch: Swift actions taken across Asia-Pacific to cushion Mideast energy shocks

HONG KONG, March 14 (Xinhua) -- Escalating conflict in the Middle East has unleashed a wave of energy market volatility across the Asia-Pacific, driving sharp fuel price surges, supply chain disruptions and fears of broader inflationary pressure, while prompting governments from Laos to Australia to roll out a flurry of measures to mitigate the impact.

STRONG JOLTS

The Middle East conflict has sent cascading energy shocks through the Asia-Pacific, a region that depends heavily on the Middle East for crude oil and gas imports.

Fuel prices have skyrocketed across the region: Cambodia's diesel prices have soared 66 percent since the conflict's outbreak; Vietnam's retail diesel prices spiked more than 30 percent in just two days; Sri Lanka also raised retail fuel prices.

The volatility has sparked panic buying in multiple economies, from Liquefied Petroleum Gas (LPG) cylinders in India to petrol in New Zealand and the Philippines, while some fuel stations in Cambodia have halted sales amid supply fears.

Additionally, the energy crunch has triggered knock-on effects, including airline fuel surcharges, soaring freight costs, and mounting inflationary pressures, with economists warning of higher consumer prices across transportation, food production and daily goods in economies like Malaysia.

ENERGY CONSERVATION & CURBING SPECULATION

Faced with these challenges, governments across the Asia-Pacific have launched a slew of targeted short-term interventions and long-term structural measures to stabilize fuel supplies, curb market irregularities and build lasting energy resilience.

Immediate demand-reduction policies have been rolled out across the region. In Southeast Asia, Thailand mandated government functions that do not concern public service delivery to work from home and suspended overseas official visits to cut energy use. Vietnam also encouraged remote work, as well as carpooling, public transport and electric vehicle adoption. Malaysia has decided to cut ministerial foreign travel and scaled back Eid al-Fitr celebrations by government departments and government-linked companies to reduce energy and fiscal pressure.

The South Asian state of Pakistan introduced sweeping austerity: a 50-percent cut to government fuel allocations for two months, a 60-percent of official vehicles idled, a four-day workweek for government offices, and a two-week school closure.

Governments have cracked down on hoarding, price gouging and smuggling, with some introducing rare price controls. South Korea plans to implement a domestic fuel price cap, which, if implemented, would be the first time in almost five decades since the Second Oil Shock in the mid-1970s.

Cambodia launched investigations into nearly 2,000 fuel stations that halted sales, warning hoarders of fines or license revocation. Vietnam's prime minister ordered strict inspections of cross-border fuel smuggling and hoarding, mandating stations not suspend sales without valid reasons. India intervened to stop LPG black-marketing, with officials refuting shortage rumors and urging consumers to remain calm.

UNLOCKING RESERVES & ACCELERATING ENERGY SHIFT

Countries have moved swiftly to tap strategic fuel reserves and adjust supply rules for immediate relief. Australia will release up to 762 million liters of petrol and diesel, and temporarily relax fuel quality standards for 60 days, which could add 100 million liters to the monthly petrol supply.

According to media reports, Japan plans to tap its oil reserves as early as March 16 -- 15 days of private stockpiles followed by 30 days of government-held reserves -- to counter expected import drops and a four-week streak of rising retail gasoline prices.

In addition to short-term means, nations are accelerating structural reforms to reduce fossil fuels reliance, turning the crisis into a catalyst for energy transition.

Laos held a high-level meeting, discussing supply source diversification and reserve oversight upgrades, while prioritizing electric vehicle promotion and public EV networks, and setting up a dedicated task force to formalize long-term policies via legislation. Indonesia said it is preparing to gradually replace diesel power plants with renewable energy, with large-scale solar and geothermal projects expected to be rolled out in the near future.

In a joint statement released Friday, ASEAN economic ministers emphasised the need to manage energy consumption, diversify energy sources and supply routes, particularly through biofuels and renewable energy, as well as accelerate renewable energy transition and alternative energy development.

"We joined the ASEAN Foreign Ministers in calling for the de-escalation of the conflict in the Middle East through diplomatic and peaceful means, including the cessation of hostilities, the exercise of maximum restraint, and the pursuit of dialogue by all parties concerned," the statement said. ■