AI Summary
5 min readAsia's energy markets face acute stress from disruptions in the Middle East, particularly around Iran and the Strait of Hormuz, which serves as a vital choke point for oil, liquefied natural gas (LNG), and propane flows. Morgan Stanley analyst Mayang Maheshwari explains how about a quarter of the region's energy supply passes through this narrow strait, amplifying risks to power generation, industrial output, and food supply chains in a way not seen in over 50 years.
Deep Reliance on Middle East Supplies
Asia's refiners source up to 80% of their crude oil from the Middle East, while 30-40% of LNG imports originate there. For major importers like India and China, 40-50% of oil demand routes through the Strait of Hormuz, making it a critical energy highway. When flows slow, the interconnected system backs up quickly. Although Asia maintains 65-70 days of crude inventories as a buffer, the market reacts well before stocks deplete—governments ration energy, industries reduce LNG and LPG usage, and export restrictions curb downstream fuel production. This dependence extends to propane, tightening supply chains across multiple fuels.
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What you'll learn
- 1 (00:00) **Intro and Host Setup** - Mayang Maheshwari introduces self and episode on Iran-linked disruptions via Strait of Hormuz impacting Asia's energy
- 2 (00:19) **Asia's Middle East Energy Dependence** - 25% of oil, LNG, propane flows through Hormuz choke point, affecting power, industry, food chains
- 3 (00:47) **Historical Context and Current Stress** - First major shock in 50 years with oil at $100/barrel building system-wide pressure
- 4 (01:14) **Refining and Import Reliance** - Refiners source 80% crude from Middle East; 30-40% LNG imports from region
- 5 (01:42) **Inventory Buffers vs. Early Reactions** - 65-70 days crude held, but governments rationing, industries cutting usage, export curbs already in place
- 6 (02:03) **LNG as Key Pressure Point** - Qatar infrastructure hit; Asia consumes 50% global LNG with 40% from Middle East and minimal buffers
- 7 (02:27) **Ripple Effects on Petrochem and Fertilizers** - 25M tons petrochem capacity and 10M tons fertilizer impacted; polymer prices up 15-25%
+ Full timestamped outline available in the app
Show Notes
Our Asia Energy Analyst Mayank Maheshwari discusses how the conflict in the Middle East is sending ripple effects through Asia’s energy, power and food systems.
Read more insights from Morgan Stanley.
----- Transcript -----
Welcome to Thoughts on the Market. I’m Mayank Maheshwari, Morgan Stanley’s research analyst covering energy markets in India and Southeast Asia.
Today—how disruptions linked to Iran and the Strait of Hormuz are creating energy-related disruptions across Asia.
It’s Monday, March 23rd, at 8am in Singapore.
To understand the scale of the impact, let’s start with a simple fact: about a quarter of Asia’s energy—that is oil, liquefied natural gas, and propane—comes from the Middle East, much of it flowing through a single chokepoint, the Strait of Hormuz. Any disruption here affects more than just oil prices. It also hits power generation, industrial output and even food supply chains across the region.
Asia hasn’t seen a true energy access shock in over 50 years. So that makes this moment very critical. And with oil around $100 per barrel, stress is building in the system. Diesel margins are double pre-conflict levels. Jet fuel premiums have nearly doubled. And Dubai crude—normally cheaper than Brent historically—is now trading at a premium of more than $20 per barrel. This kind of price move signals tightening supply chains.
Asia’s dependence on [the] Middle East runs deep. Refiners source up to 80 percent of crude from the region, and 30–40 percent of LNG imports originate there. For major economies like India and China, roughly 40–50 percent of oil demand passes through Hormuz. It’s a critical energy highway. And when flows slow, the entire system backs up.
Inventories may look like a buffer. Asia holds around 65–70 days of crude. But the system reacts sooner than waiting to run out. Governments are already rationing energy, industries are cutting LNG and LPG usage, and export restrictions are limiting downstream production of fuels. The tightening has already begun.
The real pressure point may not be oil, but natural gas—particularly LNG, as Qatar, which is a big supplier of Asia's LNG, has seen infrastructure damage. Asia accounts for about half of global LNG consumption, with up to 40 percent secured from the Middle East. Unlike oil, LNG has very limited buffers; in number of days, and not in months.
This is where the story extends well beyond energy. Around 25 million tons per year of petrochemical capacity has been impacted, along with roughly 10 million tons of fertilizer production. Prices for key materials like polymers have risen 15–25 percent in just a few weeks, and the premiums are still rising. These inputs feed into everyday products—from cars and electronics to packaging and agriculture. Even basic ser
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