Manila Hits the Energy Panic Button as Hormuz Shutdown Sends Oil Prices to the Stratosphere

The recent U.S./Israel-Iran clash, which ignited on Feb 28, has slammed the world's most critical energy chokepoint shut. The closure of the Strait of Hormuz has effectively corked a bottle holding roughly 20% of all seaborne oil, sending shockwaves across every continent—a classic case of geopolitical FUD with very real, very expensive consequences.

In the Philippines, President Ferdinand Marcos Jr. has officially upgraded the national status to full-blown energy emergency. The archipelago is staring down the barrel of this crisis, importing a staggering 98% of its oil from the now-blockaded Gulf. This makes it one of Asia's most vulnerable economies, a position about as comfortable as holding a leveraged long position during a black swan event. Gasoline prices have already more than doubled since the conflict began, proving that the only thing pumping faster than oil is pain at the pump.

Not to be outdone in the austerity Olympics, Bangladesh swiftly moved to shut down all universities and crank up jet-fuel prices in early March, a desperate bid to curb electricity and fuel use. Pakistan trimmed the government workweek to a cozy four days and pressed pause on schools for a fortnight. Meanwhile, Vietnam’s trade ministry issued a gentle suggestion for businesses to embrace remote work, essentially recommending a corporate-scale "stay home, stay poor" strategy to conserve energy.

Next door, India’s Prime Minister Narendra Modi issued a stark warning, stating that the "West Asian war" is throwing global trade routes into chaos and severely disrupting supplies of petrol, diesel, gas, and fertilizers. In Europe, Slovenia has taken the lead in the rationing game, becoming the first EU member to cap private drivers at 50 liters per day. Businesses and farmers get a slightly less stingy allowance of up to 200 liters, because apparently, keeping the economy afloat requires a bit more juice than a commuter's sedan.

The International Energy Agency, not missing a chance to recycle 2020's greatest hits, has even floated COVID-style lockdown advice—think work-from-home mandates and skipping flights—as oil prices continue their relentless climb. If the hostilities persist, import-dependent economies can expect the pressure to mount in the coming weeks, facing a liquidity crunch of the most literal, fossil-fueled kind.