Governments across Asia are attempting to avert their second major energy crisis within six months, as a new maritime chokepoint in the Middle East faces a violent blockade. Yemen's Houthis have launched a blockade of Saudi Arabian shipping passing through the Bab al-Mandab strait, which forms the southern entrance to the Red Sea.
Countries such as Japan, the Philippines, Thailand, and South Korea, which depend on Middle East oil for up to 90% of their imports, are working to secure supplies. This follows Iran's effective closure of the Strait of Hormuz in March, which had already forced regional governments to compete for diminishing crude oil supplies.
The Suez Canal is now the only completely open route for the free movement of Gulf oil. However, some Japanese and South Korean refiners are reportedly considering rerouting cargoes north through the Suez Canal, to the Mediterranean and around Africa, a detour that would incur significant costs and more than double voyage times for most Asian importers.
The disruption has led to a rise in inflation, putting pressure on governments in countries like Japan and Indonesia. War risk premiums for tankers have reportedly doubled in the last week, potentially adding hundreds of thousands of dollars to voyage costs, which are expected to be passed on to consumers.