The global energy crisis and its impacts on Asian emerging economies

Atlantic Council  |  Phillip Cornell

The global energy crisis poses a concentrated stress test for Asian emerging economies, particularly due to the Strait of Hormuz's critical role as the most vital chokepoint in the global energy system. Roughly 20 percent of global oil and a similar share of liquefied natural gas (LNG) trade pass through the strait, with nearly 90 percent of these flows destined for Asian markets, as noted by the International Energy Agency (IEA).

This high concentration of exposure means the crisis's real impact for emerging markets involves physical cargo availability, freight costs, insurance premiums, and substitution constraints. These factors exacerbate domestic vulnerabilities like import dependence, limited fiscal space, and reliance on imported fuels for power systems. Asian energy importers are already facing difficult trade-offs between affordability, energy security, and macroeconomic stability, with impacts depending on the disruption's duration. Hopes of early stabilization are considered "optimistic."

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