Asia’s Fuel Crunch Forces Four-Day Weeks and School Closures

Motorists line up to refuel at a gas station in Hanoi on March 10. Photographer: Linh Nguyen/Bloomberg Photo by Linh Nguyen /via Bloomberg

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(Bloomberg) — A widening supply crunch is forcing Asian governments to put more restrictions on fuel use and instruct citizens to avoid panic-buying, as the war in the Middle East limits the availability of energy.

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Vietnam reduced import tariffs on some petroleum products and said oil not yet committed for export must be sold to domestic refineries. The country’s civil aviation authority warned that jet fuel shortages could emerge from early April, with suppliers delaying deliveries or possibly invoking force majeure clauses to terminate contracts.

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In Thailand, the government instructed agencies to adopt work-from-home arrangements and suspended non-essential overseas travel as part of emergency measures to curb energy demand. The Philippines — which imports nearly all of its oil — has already begun a temporary four-day week for government offices, where elevator use has been limited and air-conditioning set to a minimum 24C (75F).

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Pakistan also reduced the working week, closed schools and temporarily halted salaries for cabinet ministers among more than a dozen austerity measures announced by Prime Minister Shehbaz Sharif in a televised address late Monday. India invoked emergency powers to redirect supplies of liquefied petroleum gas away from industrial users to households.

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“It is no longer just a price issue, but primarily a supply issue — and India’s emergency reserves are being drawn down quickly,” said Madhavi Arora, an economist at Emkay Global Financial Services Ltd. “Any government will prioritize its citizens over industries during times of shortages. But industries are being hit, which will ultimately affect economic growth.”

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Upheaval has spread across the Middle East and beyond since the US and Israel launched strikes on Iran on Feb. 28. Oil and gas consumers are growing increasingly concerned that supplies will be disrupted by Iranian strikes on energy infrastructure and the near-closure of the Strait of Hormuz, a chokepoint through which a fifth of the world’s oil and liquefied natural gas must pass.

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The conflict, which has sucked more than a dozen countries into the fray, has led to a surge in global energy prices, including oil, natural gas and products such as diesel. Crude spiked toward $120 a barrel on Monday after major producers in the Persian Gulf were forced to cut output, though prices retreated sharply after US President Donald Trump said the war would be resolved “very soon.”

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The effects are reverberating around Asia, where airlines are raising ticket prices and mapping out contingency plans that include grounding planes. Vietnam has proposed allowing them to impose fuel surcharges and adjust the price cap on domestic fares to help maintain operations. The operating costs for national carrier Vietnam Airlines could rise by 50% to 60% per month, the aviation authority said.