CHIANG RAI, Thailand — Southeast Asia, home to some 700 million people, gets most of its oil and gas through the Strait of Hormuz, making it among the regions hardest hit by Iran's blockade of the waterway.
The Philippines imports 90% of its oil from the Middle East, and with little to no oil making it through the Strait of Hormuz, President Ferdinand Marcos Jr. declared a national energy emergency on Tuesday, saying: "Nothing is off the table. We are looking at everything, everything that we can do."
Cutting fuel taxes and providing subsidies for poorer Filipinos are two options the government is employing to help address rising gas prices as well, as is a four-day work week. Manila is also asking Russia and China for help as a nation of islands that—according to the government—has only about two months of gasoline and diesel on hand for a population of more than 117 million people.
And it's not alone.
"Vietnam has 30 to 45 days of reserves, Thailand has about 61 days and Singapore has 20 to 50 days," says professor Indra Overland, who follows Southeast Asia as head of energy research at the Norwegian Institute of International Affairs.
Indonesia and Malaysia are better off, he says, since both are substantial producers of oil and natural gas. But both, he says, will still feel the shock from higher prices for imports and exports as shipping costs rise along with the cost of fuel.
"The small countries with small refining capacity are the countries that will suffer the most," says Alloyius Joko Purwanto, energy economist at the Economic Research Institute for ASEAN and East Asia (ERIA), "Cambodia, Laos and Myanmar."
Landlocked Laos has already seen its normal provider, Thailand, reduce deliveries and the country is encouraging work from home and instituted a four-day school week, while hundreds of filling stations have already closed due to lack of fuel. Cambodia—which saw its traditional supplier Thailand cut off deliveries after their border war earlier this year—is now looking to Vietnam and Singapore for relief.
In Vietnam, the shortage of jet fuel is already being felt, since the country normally sources much of it from China and Thailand—both of which are cutting back on exports to serve their own markets. Vietnam Airlines has announced it's cancelling dozens of domestic flights beginning in April because of the shortage of fuel. And the country's tourism industry is already reeling as a result of the war.
Tourism Industry hit
"Yes, especially flights transiting the Middle East like Doha and Qatar…many of our customers who booked the transit flights got them canceled," says Nguyen Chi Cuong, who manages the French market at Hanoi Travel.
"At the moment direct flights between Paris and Hanoi or Paris and Ho Chi Minh City have yet to be affected much, but overall the French market is being hit," he says.
And the knock-on effect of fewer arrivals is being felt in the rest of Hanoi's hospitality industry—at places like the Conifer Boutique Hotel in Hanoi's popular Old Quarter.
"In the last week, we had several tour groups canceled," says head receptionist Nguyen Anh Tu. "All guests who were supposed to travel via the Middle East such as Dubai, Abu Dhabi, or Qatar are no longer able to arrive as scheduled. Travel agents are helping to rebook them on flights via Turkey or China, but some prefer to cancel altogether."
"We have agreed to waive the cancellation fees due to force majeure, as we have no other choice," he adds.
But despite long lines for fuel and rising prices at the pump, the bigger question for Vietnam's government is whether it can keep its burgeoning manufacturing sector humming. The country's new leader, To Lam, has set an ambitious GDP growth target of 10% a year through 2030 in order to make Vietnam a high-income nation by 2045.
Dominic Scriven, who heads Dragon Capital in Ho Chi Minh City, said he sees no sign of panic, noting: "Vietnam has peace, it has food, it has growth, and it has power. So, it is pretty well prepared in terms of resilience."
Vietnam already produces about half its energy needs with hydropower and natural gas, Scriven says, and it's taken steps to ensure a steady supply of fuel from powerful—and invested—friends.
"There are good relationships with Russia, China, Japan and Korea," he says, "and while most of those countries are themselves importers, the relationships are deep in the manufacturing supply chain. And so, everybody has an interest in making sure that supply chains can continue to function. And they are at the moment." But he cautions no one can tell what will happen should the war continue indefinitely.
Concerns for manufacturers
In Thailand, things are also continuing to function—for now. But, like the Philippines, it depends almost entirely on supplies from the Middle East for its oil and much of its natural gas.
"Thailand has quite a high share of natural gas used for power generation," says the ERIA's Purwanto.
That could lead to higher prices for consumers and manufacturers at home if alternative sources of gas aren't found. Higher prices at the pump have affected domestic tourism, too.
The international tourism market—a major contributor to Thailand's GDP-- has been hammered, with more expensive long-haul flights that avoid the Middle East affecting hotel bookings ahead of the major holiday of Songkran.
The government this week also sharply reduced fuel subsidies for consumers imposed at the beginning of the war, leading to a sharp increase in prices at the pump, which could, in turn, lead to higher prices for goods and services.
Long lines for fuel are commonplace. At a gas station in Chiang Rai Thursday roughly 80 to 90 cars were lined up on the side of the highway waiting for gas along with several dozen motorbikes, and attendants with bullhorns were directing motorists to pumps.
One 42-year-old motorcycle food delivery driver said he spends about an hour a day in line for fuel—and now works longer hours for less money.
"Before the war, I was clearing about 1,800 baht a day," he says. That's a little more than $50. "Now I'm lucky to clear three or four hundred," he adds, which is not nearly enough to provide for his family of four.
"Gas keeps getting more expensive and people aren't ordering as much," he says. "They're worried things will get worse."
And, says Indra Overland, the head of Energy Research at the Norwegian Institute of International Affairs, they very easily could.
"There's a lot of focus on oil and gas, but the Persian Gulf countries are also very big producers of fertilizer, based on natural gas mostly," he says. "And partly they produce fertilizer and ship it out through the Straight of Hormuz, and partly some of the fuels they ship out are then turned into fertilizer in other places."
He adds that this is vital for the food supply chain, which is very sensitive in many of the Southeast Asian countries.
"So you get not a double but a triple whammy of oil, gas and fertilizer becoming more expensive," he says.
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