Asia's celebrated resilience to Middle East oil shocks is finally cracking. As writing in Asia Times, columnist William Pesek warns that after months of draining reserves and shielding consumers from soaring fuel costs, the region's oil importers have exhausted their buffer — and a crisis once seen as containable is now set to "bite hard."
With crude approaching $100 a barrel, policymakers from Tokyo to Jakarta are on high alert. Citing Goldman Sachs, Pesek reports the bank fears oil could hit $120, with economist Daan Struyven pointing to escalating attacks on shipping through the Strait of Hormuz and the Red Sea as the likeliest trigger for a fresh spike.
The timing could hardly be worse. A conflict President Trump predicted would last weeks is nearing its seventh month, and the Asia Times analysis notes that Asia's toolkit for absorbing another shock is "far more depleted" than before. India, Indonesia and the Philippines have already burned through subsidy budgets defending currencies and consumers, while Bangladesh battles severe power shortages.
Nor is the damage confined to oil. Pesek highlights a resurgent US dollar compounding inflation across the region, with markets bracing for a US inflation report that could lock in a Federal Reserve rate hike. "A hot CPI print would all but seal a September hike," Elias Haddad of Brown Brothers Harriman told *Asia Times*.
Even China — whose exports surged 25% year-on-year in August — may no longer be the region's safety net. Its "K-shaped" economy, pairing strong exports with weak domestic demand, leaves it vulnerable if Trump's tariffs and pricier oil dent global appetite for Chinese goods, the article argues.
Japan faces its own reckoning: 10-year bond yields near three-decade highs of 3%, a 260% debt-to-GDP ratio, and a volatile yen that prompted the first coordinated US-Japan currency intervention since 1998.
The deepest risk, Pesek concludes, comes from Washington itself. Trump's war in Iran, his tariffs, and his pressure on the Fed are eroding trust in the dollar and US debt. For Japan, South Korea, India and ASEAN — all heavily dependent on Hormuz crude — the next hit to growth, he warns, "could prove harder to withstand than the last."