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5 min readThe Strait of Hormuz Closure Is Rewiring Asia's Energy Future
"Terrible, frankly." That's how Alex Turnbull, an investor and energy security researcher based in Singapore, describes the situation for East Asian countries after the Strait of Hormuz effectively shut down. While global oil benchmarks like Brent and WTI have risen but remain within historical ranges, the real story is unfolding in Asia, where countries are already facing rationing, refinery shutdowns, and a frantic scramble for alternative supplies. The disconnect between relatively calm headline oil prices and the chaos on the ground in places like the Philippines, Vietnam, and the Pacific Islands reveals something important: the world's energy system is still deeply divided between East and West, and the East is taking the full force of this shock.
Why Asia Is Hit Hardest and Why Prices Don't Tell the Full Story
Asia imports most of its crude from the Middle East because it is the closest and cheapest source. When the Strait of Hormuz closes, there is no easy workaround. Unlike the 2022 Russia-Ukraine crisis, where oil could still move by pipeline or rail, this is a physical blockade. As Turnbull puts it, "You actually just can't get it out. That's all there is to it."
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What you'll learn
- 1 (02:01) **Introduction: The Strait of Hormuz is Still Closed, Oil Prices Aren't Reacting as Expected** - Tracy and Jill set up the disconnect between a massive supply disruption (the Strait of Hormuz) and a relatively muted oil price, noting that the real pain is showing up in East Asian refined product markets and rationing headlines.
- 2 (06:08) **Guest Introduction: Alex Turnbull on the Ground in Singapore** - Alex Turnbull, an investor and energy security researcher based in Singapore, joins to explain the Asian perspective.
- 3 (06:42) **How Dire is the Situation for Asia? "Terrible, Frankly"** - Alex describes the immediate severity for Asian economies that are heavily dependent on Middle Eastern crude.
- 4 (07:51) **The Spot Price Disconnect: What Does a Price Mean if Oil Can't Move?** - Alex explains why spot prices exist but don't reflect the real-world inability to get physical barrels.
- 5 (09:00) **Who Is Being Shut Out? The "Hand-to-Mouth" Refiners** - Alex details the credit and physical supply crunch hitting smaller Asian economies.
- 6 (10:58) **Asian Refining Margins Turn Negative: How Long Can They Last?** - Alex explains the bizarre dynamic where refiners lose money on every barrel but keep operating.
- 7 (12:22) **The LNG Battle: Asia is Outbidding Europe for US Cargoes** - Alex describes the immediate shift in global gas flows.
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Show Notes
The war in Iran has caused the price of all kinds of commodities to surge, and that has a negative economic impact almost everywhere. But the squeeze is really being felt hard in East Asia, which is the ultimate destination for a lot of oil and gas that come out of the Gulf. And though the Strait of Hormuz may eventually re-open, and the acute pain may pass, this episode may already be reshaping the future. On this episode of the podcast we speak with Alex Turnbull, an investor based in Singapore, and a researcher on energy topics with the Australian National University. He argues that the war will accelerate the region's appetite to restart nuclear power plants, ultimately lessening its dependence on imported natural gas. He also notes that per his channel checks, the region is already seeing a jump in demand for electric vehicles, with BYD dealers holding less and less inventory on hand.
Read more: US, Iran Seek More Ceasefire Talks as Blockade Stops Ships
There Are No Easy Exits From Iran for the US
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