The closure of the Strait of Hormuz, a critical waterway for global oil and natural gas shipments, is sending ripples through energy markets and raising concerns about potential economic disruption, particularly in Asia. A senior commander from Iran’s Revolutionary Guard announced Monday that the strait was effectively shut down, warning that any vessel attempting passage would be targeted, a claim reported by both Reuters and Iranian state media . This action immediately impacted global benchmark Brent crude, which rose 2.6% to around $80 per barrel—nearly 10% higher since the escalation of tensions began.
The Strait of Hormuz, situated between Oman and Iran, is a vital chokepoint for the world’s energy supply. In 2025, approximately 13 million barrels of crude oil per day transited the strait, representing around 31% of all seaborne crude flows, according to energy consulting firm Kpler. Beyond crude, roughly 20% of global liquefied natural gas (LNG) exports from the Persian Gulf also pass through the strait, originating primarily from Qatar. The situation is already impacting production, with Qatar halting LNG production on Monday following reported Iranian drone attacks on facilities at Ras Laffan Industrial City and Mesaieed Industrial City .
While the full extent of the disruption remains to be seen, analysts agree that Asia will bear the brunt of the impact. Nomura analysts wrote in a note Monday that Thailand, India, Korea, and the Philippines are the most vulnerable to higher oil prices due to their significant import dependence, while Malaysia is expected to be a relative beneficiary as an energy exporter.
South Asia: Facing Immediate Strain
South Asia is poised to experience the most immediate and acute disruption, particularly concerning LNG supplies. Kpler data indicates that Qatar and the United Arab Emirates account for 99% of Pakistan’s LNG imports, 72% of Bangladesh’s, and 53% of India’s. Pakistan and Bangladesh are particularly vulnerable due to limited storage capacity and procurement flexibility. Bangladesh, already facing a substantial structural gas deficit—a shortfall exceeding 1,300 million cubic feet per day, according to the Institute for Energy Economics and Financial Analysis —is likely to see rapid demand destruction in the power sector rather than aggressive bidding for spot supplies.
India, with the largest combined exposure in the region, faces a “dual physical and financial shock,” according to Kpler’s principal insight analyst, Head Katayama. More than half of India’s LNG imports are linked to the Gulf, and a significant portion is indexed to Brent crude, meaning a surge in oil prices will simultaneously increase both oil and LNG costs. Approximately 60% of India’s oil imports also originate in the Middle East, amplifying the potential for increased energy costs and current account pressures.
China’s Exposure, Buffered by Reserves
A closure of the Strait of Hormuz would undoubtedly test China’s energy security, but the country possesses stockpiles and alternative supply routes that offer some degree of buffer. As the world’s largest crude oil importer, China purchases over 80% of Iranian oil, according to Kpler . Roughly 30% of its LNG imports come from Qatar and the UAE, and approximately 40% of its oil imports transit Hormuz, estimates from UBP suggest.
As of the complete of February, China held approximately 7.6 million tons of LNG in inventory, providing short-term cover, Kpler reports. However, a prolonged outage would necessitate competition for Atlantic cargoes, tightening the Pacific basin and potentially intensifying price competition across Asia, even if Beijing manages to avoid outright shortages. Saudi Arabia has reportedly increased crude loadings in recent weeks, and strategic petroleum reserves held by major consuming nations, including China, could offer temporary relief to the market, according to Rystad Energy.
Japan, South Korea, and Southeast Asia: Rising Costs
Japan and South Korea, heavily reliant on Middle Eastern oil, are also facing potential challenges. The Middle East supplies 75% of Japan’s oil imports and around 70% of South Korea’s, according to UBP. While their LNG exposure to the Gulf is lower than that of South Asia—South Korea sources 14% of its LNG from Qatar and the UAE, while Japan sources 6%—the potential for price shocks remains significant. Economies with high energy import reliance, such as Japan, South Korea, and Taiwan, are particularly exposed to supply disruptions, notes Shier lee Lim, lead macro and FX strategist at Convera.
Inventories in both countries are limited, with South Korea holding around 3.5 million tons of LNG and Japan around 4.4 million tons, enough for roughly two to four weeks of stable demand, Kpler estimates. Nomura has flagged South Korea as particularly vulnerable on the current account front, with net oil imports representing 2.7% of its gross domestic product.
Across Southeast Asia, the initial impact is expected to be cost inflation rather than immediate shortages. Spot-reliant LNG buyers will likely face significantly higher replacement costs as they compete with Europe for Atlantic cargoes, according to Katayama. Thailand, in particular, is identified by Nomura as a standout loser, with the largest net oil imports in Asia (4.7% of GDP) and a current account that could worsen by 0.5 percentage points for every 10% rise in oil prices.
The situation remains fluid, and the duration of the Strait of Hormuz closure is currently uncertain. The next key development to watch will be any diplomatic efforts to de-escalate tensions and reopen the waterway. Further announcements from Iran’s Revolutionary Guard, as well as responses from international naval forces, will be critical in assessing the evolving situation.
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