Diverging Responses to the Strait of Hormuz Crisis Across Southeast Asia

The ongoing crisis in the Strait of Hormuz, a crucial maritime route for global oil shipments, has triggered a supply chain crisis across Southeast Asia. This situation has exposed the starkly different vulnerabilities and responses among ASEAN nations, particularly in how they manage their energy dependencies and reserves. The divergence in responses underscores the varying levels of exposure and the distinct policy tools available to each country.

Energy Dependency and Vulnerability

The Philippines stands out as the most vulnerable ASEAN state, with approximately 95-98% of its crude oil sourced from the Persian Gulf. This makes the country almost entirely dependent on oil imports, leading to soaring pump prices that have surpassed 100 pesos per liter. In response, President Marcos declared a national energy emergency, allocating a 21.47 billion peso emergency fund and implementing a four-day work week to mitigate the crisis. Assessments by the Asian Development Bank and ING, cited by the Observer Research Foundation, indicate that the Philippines has only 50-60 days of commercial reserves, making it particularly susceptible to disruptions.

Vietnam, while also heavily reliant on Gulf imports for 87-88% of its crude and 49% of its LNG/LPG, has taken measures to secure alternative supplies. The government has eliminated fuel import tariffs and procured around 4 million barrels from non-Gulf sources. However, with only about 20 days of reserves, the country faces significant challenges, including rising diesel prices (up 84%) and gasoline prices (up 21%). The Ministry of Industry and Trade has reported severe difficulties for local manufacturers in sourcing raw materials, leading to increased production costs and delays.

Responses from Net Exporters

On the other end of the spectrum, Malaysia, as a net oil and LNG exporter, has more room to maneuver despite facing imported inflation. While 69% of its crude imports come from the Gulf, the country is less affected by physical supply disruptions. However, it is still dealing with challenges in sectors like fertilizers and semiconductors, which have raised concerns about helium supplies. The government is weighing potential fuel-export restrictions to stabilize the domestic market, as noted by the Observer Research Foundation.

Thailand, with its significant energy reserves of about 110 days, has also implemented measures to cushion the impact of rising fuel prices. The government has capped diesel prices at 29.94 baht per liter and banned processed fuel exports, except to Laos and Myanmar. This proactive approach aims to stabilize domestic fuel prices while ensuring sufficient supply for local needs. Thailand's dependency on the Gulf for 59% of its crude and 28% of its LNG/LPG highlights its vulnerability, but the government's swift actions have provided a buffer against the crisis.

Indonesia's Unique Position

Indonesia, despite being Southeast Asia's largest economy and an oil producer, faces its own set of challenges. With only 21-23 days of oil reserves, the country has accelerated its B50 biodiesel program to diversify its energy sources. The government has also budgeted substantial subsidies to manage fuel prices, but these measures are at risk of overrun due to the crisis. Indonesia's reliance on West Asia for 20% of its crude and 75% of its sulphur adds to its exposure, as noted by Al Jazeera.

Singapore's Strategic Maneuvers

Singapore, as a major regional oil hub, has leaned on its financial reserves to absorb the shock of rising oil prices. The city-state has diversified its supply sources, including agreements to import Russian crude via spot markets, while also managing refinery outputs to stabilize the local market. With 52% of its crude sourced from the Gulf, Singapore is acutely aware of the risks posed by the ongoing crisis. The city-state's proactive measures include cutting refinery output and leveraging its financial reserves to cushion the blow, as reported by the Observer Research Foundation.