Asia faces crisis from ME disruption, Singapore foreign minister warns

SINGAPORE: The war against Iran threatens to send Asian economies into crisis, Singapore’s foreign minister said on Monday, a stark warning in a region that is acutely exposed to the massive disruption of Middle East energy supplies.

“Right now the closure of the Strait of Hormuz is, in a sense, an Asian crisis,” Vivian Balakrishnan told Reuters.

In remarks made over an hour-long interview, he also raised questions about the necessity and legality of the US-Israeli war on Iran that is now entering its fourth week, saying the “entire global economy has been taken hostage” by a conflict that could usher in a financial crisis.

The war has shut down the Strait of Hormuz through which 20% of the world’s oil and liquefied natural gas flow, pushing up oil prices and raising fears of a renewed spike in global inflation, with no clear end in sight.

While the United States has become a net oil exporter, industry-heavy economies in Asia are far more reliant on crude oil from the Middle East, Balakrishnan said.

Asia, the top oil importing region, sources nearly 60% of its crude and petrochemical naphtha feedstock from the Middle East. That exposure has led countries including China to halt refined fuel exports, while numerous petrochemicals plants and refineries in the region have scaled back operations or declared force majeure.

Reuters reporting shows around 80% of oil shipped through the Strait of Hormuz heads to Asian buyers.

“The vulnerability has been known, but it’s never been tested to the extreme that it is being tested today,” Balakrishnan said. He warned that much would be determined by whether US President Donald Trump followed through on his warning to destroy Iranian power plants if the Strait of Hormuz was not open to all shipping by around 2345 GMT on Monday.