Foreign media report that energy disruptions caused by the conflict in Iran are not over. Although Brent and WTI crude oil prices have declined from their April highs, global crude oil inventories are approaching their lowest levels in nearly eight years. Asia, which relies heavily on Middle Eastern crude oil and natural gas, faces more direct input pressures.
Inventory buffer is thinning
Goldman Sachs estimates that by the end of May, global crude oil inventories could fall to just 98 days of demand. JPMorgan notes that while total inventories remain high, the amount that can be quickly accessed is limited.
According to their estimates, of the global inventory of approximately 8.4 billion barrels, only about 800 million barrels are actually available without triggering system stress. By the end of April, countries had already released approximately 280 million barrels from their reserves to mitigate the impact of the conflict.
This means that while there appears to be inventory remaining in the market, the amount of oil immediately available for circulation is limited. The rest of the inventory is constrained by factors such as pipeline filling and minimum operating levels in storage tanks, making it difficult to convert into effective supply in the short term.
A drop in oil prices does not necessarily indicate reduced risk.
The article suggests that the current market reaction does not fully align with the actual supply gap. Brent crude is currently hovering around $100 per barrel, below the $126 peak reached in April; WTI crude has also retreated to around $100, below its early April high of $113.
Some analysts attribute this performance to futures markets still betting on a de-escalation of tensions. Wood Mackenzie believes that Middle Eastern crude could resume flows by late May, a prospect that has weighed on longer-dated prices. The article also notes that the current market exhibits an inverted structure—“strong spot, weak futures”—reflecting traders’ greater focus on near-term tightness rather than prolonged supply imbalances.
However, if the Strait of Hormuz remains closed through the end of June, some experts predict oil prices could rise above $150 per barrel. The report cites scholars stating that approximately 20 million barrels of crude oil were transported daily through the strait before the conflict; if the disruption lasts nearly 70 days, the cumulative shortfall would exceed 1 billion barrels.
Asia faces dual pressure from inflation and currency depreciation
The article notes that Asia is one of the most vulnerable regions to this shock. Except for Malaysia and Indonesia, most Asian economies are net importers of crude oil, with high industrial and electricity demand and greater dependence on Middle Eastern energy.
If supply disruptions continue to lengthen, weaker economies may first face pressure from slowing growth or even recession. Rising energy prices will also increase costs for food and transportation, further squeezing household spending and fiscal space.
The report mentions that some Asian countries have begun to reduce energy consumption. The Philippines switched to a four-day workweek after the conflict erupted; the Thai government has advised reducing air conditioning use and adjusting clothing; and on May 10, Indian Prime Minister Modi also urged citizens to reduce overseas travel and work from home more often.
The second wave of impact may spread to food and currency.
The article argues that the greater risk lies not only in oil prices themselves but also in the subsequent chain reactions. High oil prices raise the costs of diesel and fertilizers, which may cause agricultural nations to reduce planting, thereby affecting food supplies.
Meanwhile, some frontier markets in Southeast Asia may also face pressure on their foreign exchange reserves. If spending on imported energy continues to rise and investors become more pessimistic about economic prospects, capital outflow pressures could intensify. The report notes that the Indian rupee, Indonesian rupiah, and Philippine peso have already fallen to record lows during the Iran conflict.
The article suggests that the market is still betting on an end to the conflict and a decline in demand; however, if supply recovers more slowly than expected, Asia will face not only higher oil prices but also weaker exchange rates, higher inflation, and greater recession risks.