Middle East war splits energy markets into winners and losers

Thursday 09 April 2026 - 11:20

By: Dakir Madiha

Middle East war splits energy markets into winners and losers

A six-week conflict involving the United States, Israel, and Iran has triggered Asia's worst energy crisis in decades, with surging fuel prices, severe LPG shortages, and widespread economic fallout. A fragile two-week ceasefire announced April 7 offers only tentative relief. Wood Mackenzie's April 6 analysis shows Asia's spot LNG prices up 94 percent and coal prices rising 17 to 31 percent since fighting began February 28, creating global energy market divides.

The Strait of Hormuz closure, handling 20 percent of world oil and gas, severed vital Asian supplies that rely on it for 90 percent of oil and 80 percent of LNG. Iran's March 18 strike on Qatar's Ras Laffan LNG complex cut 28 million tonnes of annual supply, potentially delaying exports three to five years. LPG markets suffered heavily: 44.2 million tonnes passed Hormuz in 2025, or 30 percent of seaborne global exports. Asian propane prices jumped 53 percent and butane 66 percent post-closure, forcing South and Southeast Asia to source from the United States.

Japan emerges most vulnerable, with 64 percent of electricity from imported coal and gas. South Korea follows at 56 percent, and Italy leads European exposure at 47 percent. Households feel the strain: Pakistan hiked high-octane fuel 200 percent, Sri Lanka raised prices 25 percent, and Bangladesh faced delivery delays amid weak storage. Thailand eyes fuel rationing at stations, projecting 30 percent fewer Songkran tourists.

Aviation fuel hit $208 per barrel in late March, over double pre-war levels. Cathay Pacific added surcharges up to 34 percent. Hoteliers from Singapore to Bangkok report unrepassable cost hikes. The Pakistan-brokered ceasefire allows controlled Hormuz transit under Iranian military oversight, giving Tehran leverage. Oil prices eased but stay elevated; U.S. and Iran delegations meet in Islamabad Friday. Analysts call it a pause, not resolution.