Cover Story: Energy Shockwaves From U.S.-Iran War Hit Global Economy
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Raffy, who works in Manila, usually drives the three-hour journey home for the Easter holidays. Shortly after midnight on April 1, however, he found himself stranded at a packed bus terminal, as soaring fuel costs upended his travel plans. Diesel prices in the Philippines have more than doubled since the U.S.-Iran conflict erupted in late February, turning routine travel into an increasingly expensive luxury.
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- US-Israel war vs Iran blocks Strait of Hormuz (25% global oil/gas), surging US oil to $113/bbl.
- Asia hit hardest: Philippines energy emergency, fuel caps/rationing in SK/Sri Lanka, strikes, food/fertilizer shortages.
- Currencies depreciate, central banks sell $82B Treasuries; prolonged disruption risks $155 oil, 1.3% Asia growth cut.
1. Raffy in Manila faces travel disruptions due to doubled diesel prices from the U.S.-Iran conflict since late February [para. 1].
2. The U.S.-Israel war on Iran, one month in, blocks the Strait of Hormuz (25% of global oil/gas), causing energy shock, supply chain issues, and market instability [para. 2].
3. Trump claims Iran's capabilities degraded, regime change, possible U.S. withdrawal in 2-3 weeks, or targeting power/oil if talks fail [para. 3].
4. Trump urges Hormuz-dependent nations to secure route or buy U.S. crude [para. 4].
5. Markets: U.S. futures fall, oil tops $113/barrel, gold/silver drop [para. 5].
6. Iran vows to keep blocking strait; officials reject U.S. ceasefire, distrust Washington, prepare for 6-month war [para. 6][para. 7].
7. VP Vance pushes ceasefire via intermediaries with strike warnings [para. 8].
8. Pakistan, Turkey, Egypt, Saudi meet; Pakistan offers talks host, proposes 5-point China plan (ceasefire, negotiations, protections, UN Charter) [para. 9].
9. Limited breakthrough odds; Iran distrusts U.S., believes upper hand [para. 10].
10. U.S. builds up 50,000+ troops; Iran warns vs. ground incursion; Houthis block Bab el-Mandeb, risk wider attacks [para. 11][para. 12][para. 13].
11. Philippines declares energy emergency (reserves to June), fuel/electricity surges, strikes, 50% bill hikes; malls shorten hours [para. 14][para. 15][para. 16].
12. Asia responses: S. Korea price caps/restrictions; Sri Lanka rationing/4-day week/$100M aid; worse than 1970s/Russia shocks [para. 17][para. 18].
13. Thailand farm costs up 15-20%; fertilizer shortages in India/Bangladesh/Malaysia; WFP: 45M more food insecure if oil >$100 to mid-2026 [para. 20][para. 21].
14. Logistics: 400K tons rice stranded India; SE Asia-China freight doubles; 50-70% income on food hit hard; fisheries halted (Thailand 50%, India/Bangladesh shortages) [para. 22][para. 23][para. 24].
15. Capital flight depreciates Asian currencies (Korea/Thai/Phil to 1997/2008 lows); central banks intervene, sell $82B Treasuries, yields rise [para. 26][para. 27][para. 30][para. 31].
16. Resilience via reserves/swaps; IMF: manageable but tightens conditions [para. 28][para. 29][para. 32].
17. Projections: short disruption - Brent $115 Apr/$80 Q4, cuts Asia growth 70bps; prolonged - $155 Q2 2026/$140 2027, growth -1.3%, inflation +3.2% [para. 34][para. 35][para. 36].
18. Uneven: importers/low-income hit hardest; Asia secures Iran deals/export controls; Iran eyes strait fees ($2M) [para. 37][para. 38][para. 39].
19. Europe: 11M bpd oil/300M m3 LNG shortfall; curb demand/delay maintenance; Lagarde warns recession risk [para. 40][para. 41][para. 42].
(Word count: 498)
- Nomura
- Rob Subbaraman, head of global macro research at Nomura, said capital outflows from Asia depend on the conflict's duration and Strait of Hormuz reopening. He added Asian economies are more resilient than in past crises, with larger FX reserves, currency swaps, Chiang Mai Initiative participation, surpluses, low debt, and floating rates.
- Goldman Sachs
- Goldman Sachs estimates that if Strait of Hormuz flows normalize soon, Brent crude will average $115/barrel in April, easing to $80 by Q4. This short-lived scenario would shave 40 bps off U.S. GDP growth and 70 bps from emerging Asian economies (ex-China).
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