As tensions in the Middle East continue to boil, the ripple effects are being felt across global oil markets. Disruptions around the Strait of Hormuz, one of the world’s most vital oil transit routes, have thrown supply chains into uncertainty, prompting governments and refiners worldwide to rush in search of alternatives. The International Energy Agency (IEA) has warned that the situation could amount to the “largest supply disruption in history”, with millions of barrels of oil unable to move each day due to disruptions in the narrow shipping corridor. According to the agency, the scale of the shock could exceed the disruptions seen after the 1973 Yom Kippur war and the start of the Ukraine conflict in 2022. The situation further worsened after Iran’s new supreme leader, Mojtaba Khamenei, called for the key shipping route to “remain closed”, casting shadow over hopes of a quick resolution to the crisis.
Against this backdrop, global oil prices, once again, climbed above $100 a barrel. Countries dependent on imported crude have since begun taking urgent steps to secure fuel supplies and shield their economies from the escalating crisis.
India
India has turned to Russian crude to offset potential supply disruptions from the Middle East. New Delhi has purchased around 30 million barrels of unsold Russian oil after the United States issued a 30-day waiver allowing buyers to acquire cargoes that were already stranded at sea, according to a Bloomberg report citing sources.Although the Strait of Hormuz is a critical energy route, only about 40% of India’s crude imports travel through it. Even so, refiners have moved swiftly to ensure stable supply. Following the waiver, refiners including Indian Oil Corporation and Reliance Industries bought nearly all available Russian cargoes on the spot market, the report said. Meanwhile, government has also prioritised domestic LPG supplies to ensure uninterrupted access to cooking gas for households. Authorities have ensured that the retail fuel network remains fully operational, with nearly 100,000 outlets running without any dry-outs. Around 25,000 LPG distributors are supplying nearly 50 lakh cylinders each day, while commercial LPG is being prioritised for hospitals and educational institutions.
United States
The United States has opted to tap its emergency reserves as part of a coordinated effort to ease pressure on global oil markets. US Secretary of Energy Chris Wright said that members of the International Energy Agency had agreed to release oil from their reserves. “Earlier today, 32 member nations of the International Energy Agency unanimously agreed to President Trump’s request to lower energy prices with a coordinated release of 400 million barrels of oil and refined products from their respective reserves.”As part of that plan, US President Donald Trump authorised the Department of Energy to release 172 million barrels from the Strategic Petroleum Reserve starting next week.The supply will take around 120 days to reach the market based on expected discharge rates, making it one of the largest emergency releases from the US reserve.
China
China faces significant exposure to the disruption given its dependence on oil flows from the Gulf. The country accounts for roughly one quarter of the world’s oil imports, most of which originate from Gulf producers.China also consumes around 90% of Iran’s crude exports, with much of that supply routed through Malaysia to bypass sanctions. Now, the conflict risks to transit routes such as the Strait of Hormuz have raised concerns about supply security.In the short term, Beijing can rely on its strategic petroleum reserves, which are estimated at between 1.1 billion and 1.4 billion barrels. If the disruption continues, China could deepen its reliance on other suppliers, particularly Russia.At the same time, the government has moved to protect domestic fuel availability. Four sources familiar with the decision said Beijing ordered refiners to halt exports of refined fuel in March with immediate effect.
South Korea
South Korea has imposed a cap on domestic fuel prices to limit the impact of rising energy costs as authorities attempt to cushion the blow of the Middle East crisis on the country’s economy, which depends heavily on imported energy.Officials have fixed the maximum wholesale price of gasoline at 1,724 won ($1.17) per litre, compared with 1,833 won. Prices will be reviewed every two weeks to reflect changes in global oil markets.Finance Minister Koo Yun-cheol said, “The government will implement a maximum price system for petroleum products to ease the burden on consumers and firmly respond to attempts to take advantage of the crisis to increase prices excessively,” as cited by Reuters.South Korea imports almost all of its energy requirements, with about 70% of its oil and 20% of its liquefied natural gas coming from the Middle East.Authorities also plan to restrict stockpiling by refiners, requiring them to release at least 90% of the monthly volumes they supplied in March and April last year.
Australia
Australia has opted to use part of its emergency fuel reserves to manage potential shortages. The country, which depends on imported oil for much of its fuel needs, has witnessed a sharp rise in petrol prices as panic buying intensified following the outbreak of the war.The government will release the equivalent of six days’ worth of petrol and five days of diesel from its stockpiles, the first time the reserves have been tapped since the invasion of Ukraine in 2022, ABC news reported.Current data shows the country holds about 36 days of petrol supply, 29 days of jet fuel and 32 days of diesel. Energy minister Chris Bowen said the fuel would not enter the market immediately because of supply chain constraints but would give retailers greater flexibility to manage supply. He also said discussions were under way with fuel companies to ensure regional communities receive priority access. He furthercautioned fuel retailers against “dangerous” petrol price gouging, even as the government temporarily eased fuel stockholding requirements in an effort to improve supply.
France
French authorities have begun checking petrol stations across the country over concerns that companies could exploit the crisis to raise prices excessively.Prime Minister Sebastien Lecornu, as cited by The Guardian, said that inspectors would visit 500 fuel stations between Monday and Wednesday.“The war in the Middle East must not become a pretext for abusive prices at the pump,” he said.
Italy
Italy has warned that it could introduce additional taxes on companies suspected ofprofiteering from rising wholesale oil prices. Prime Minister Giorgia Meloni said the government was determined to prevent speculation during the crisis.“I am very determined to do what I can to prevent speculators from exploiting the crisis at the expense of families and businesses,” she told Italian television.Taxes already make up around 25% of the final energy costs paid by households and small businesses.
Germany and Austria
Germany has rejected suggestions that sanctions on Russia should be eased to offset the supply shock.Chancellor Friedrich Merz said the country would continue to prioritise solidarity with Ukraine despite pressure from energy markets.If the conflict involving Iran ends quickly, he said, “we will also see a relatively rapid return to normalisation on the oil and energy markets”.“Faced with the choice between sanctions and solidarity, our position is clear: we stand with Ukraine and are prepared to endure such a phase if necessary,” Merz added.Austria’s Chancellor Christian Stocker has meanwhile called for a temporary cut in petrol taxes to counter rising prices.
Hungary and Croatia
Hungary and Croatia have taken direct action to limit fuel costs by introducing price caps. Croatia has set the price at forecourts at €1.55 per litre for petrol and €1.50 for unleaded.Hungary has introduced a similar cap and announced it will release oil from state reserves.Prime Minister Viktor Orban also called on the European Union to suspend sanctions on Russian energy. Hungary and Slovakia already have exemptions from EU restrictions on Russian gas imports and recently secured a one-year exemption from US sanctions after agreeing to purchase liquefied natural gas from the United States.
Other European countries
Elsewhere in Europe, the surge in oil prices is already affecting transport and households. The Sweden-based airline SAS has said it will introduce a temporary fare increase due to higher fuel costs.In Ireland, concerns are rising over the cost of heating oil, particularly in rural areas where many homes rely on paraffin for hot water because natural gas is available in only about a third of households.Despite the pressure, the coalition government has so far resisted calls for immediate intervention, although it has previously acted against price gouging at petrol stations.
