When the war in Iran started nearly two months ago, countries in Asia—which receive more than 80% of the oil and liquefied natural gas delivered through the Strait of Hormuz—were among the most exposed to the energy shock.
But now, a combination of deep reserves, aggressive energy conservation efforts and savvy diplomatic efforts have allowed the deepest-pocketed of them to weather the blow—at least for now.
They rushed to locate energy outside the Middle East, including the U.S. and Russia, often paying top dollar on the spot markets. Countries such as South Korea barred companies from stockpiling certain petrochemical feedstocks to stabilize national supply. Japan just pledged to release from state reserves 50 million plastic gloves to medical institutions facing shortages.
These efforts show that countries, particularly the wealthy and powerful ones, are able to shield their economies from the worst of an energy shock, at least in the short term. It could leave them more resilient when the crisis ends.
Even South Korea, whose leader had called the Middle East energy crunch a “war for people’s livelihoods,” said it has managed to secure its energy supply to 80% of normal import levels, envisioning no need to touch the country’s strategic reserves until June at the earliest.
Such success could be fleeting. Should the latest talks between the Trump administration and Iran break down, a protracted stretch of limited or no supply from Persian Gulf nations will eventually hurt Asia’s biggest economies.
On Monday, Chinese leader Xi Jinping, in a phone call with Saudi Crown Prince Mohammed bin Salman, called for an “immediate and comprehensive” cease-fire to restore safe transit through the Gulf, Beijing’s Foreign Ministry said. “The Strait of Hormuz should maintain normal passage,” Xi said.
To be sure, the success in coping with the supply shock isn’t felt uniformly across Asia. Lower-income countries still face major issues. But the region’s powers that enjoy ample finances, geopolitical heft and strategic reserves have crafted quick workarounds. For instance, many, including Japan and South Korea, have sought to increasingly turn to the U.S. for energy supplies.
The Middle East supply crunch hits Asia’s export powerhouses hard in three main areas: liquefied natural gas that is needed for power, crude oil refined for transportation and petrochemicals required for things such as plastics. Most countries in Asia have little or no domestic sources of energy and rely heavily on imports, particularly from the Middle East.
China spent years preparing for such a moment, subsidizing broad use of electric vehicles, boosting domestic crude-oil production and joining with Russia to secure energy supplies. It has made significant inroads in renewable energy, both as a user and manufacturer. Coal powers more than half of its energy consumption, with oil at under one-fifth, according to analysts. Meanwhile, India has fortified its energy supplies in recent weeks by significantly increasing imports from Russia.
Japan says it so far only needs to tap about 40 days out of its 254-day oil reserves—the largest among industrialized nations, by number of days—and the government has significant state stockpiles of other items. Officials have been reluctant to ask citizens to cut back on energy use for fear of the political impact.
Tokyo used its financial muscle to offer a helping hand to Asian neighbors, especially in Southeast Asia, making available roughly $10 billion in emergency loans.
South Korea didn’t start the war with such confidence. President Lee Jae Myung admitted to having lost sleep over the energy risks posed to the country’s trade-dependent economy.
The Lee administration asked Koreans to take shorter showers, limited public-sector workers to drive to work every other day and imposed fuel-price caps for the first time in decades. The timeline to bring back online several nuclear reactors was moved up.
And this month, South Korea’s legislature approved more than $17 billion in emergency relief, including cash subsidies of up to roughly $400 for low-income citizens hit by the rising energy prices.
More than half of South Korea’s electricity is for industrial use, coming from factories producing semiconductors, autos and batteries. South Korea is also the world’s biggest jet-fuel exporter, supplying roughly 30% of the global market, according to the Korea Institute for Industrial Economics and Trade, a state-affiliated think tank. The U.S. is the biggest buyer of Korean jet fuel.
Lee named his chief of staff as the country’s special envoy for strategic economic cooperation and dispatched him overseas. Last month, South Korea won an emergency supply of 24 million barrels of crude oil set to fully arrive from the United Arab Emirates in the coming months—and a promise for the country to take priority in future oil shipments from the UAE.
The envoy made a similar trip this month, too, with stops to Oman, Saudi Arabia, Qatar and Kazakhstan. By year’s end, those four countries will have supplied South Korea with roughly 273 million barrels of crude oil and more than 2 million tons of naphtha, a crucial feedstock for the petrochemical industry.
In exchange, Seoul has offered to help establish with those countries crude-oil storage facilities and alternative supply routes outside the Strait of Hormuz.
South Korea now appears poised to be able to withstand the Middle East oil shocks through July or August “without super damage to the economy,” said Neal Won, principal analyst at S&P Global, who focuses on power and renewables.
Lee has seen his approval ratings hit their highest levels since he took office last June—driven by his performance on the economy and energy security—with two-thirds of support, according to a poll released Monday.
Write to Dasl Yoon at dasl.yoon@wsj.com and Timothy W. Martin at Timothy.Martin@wsj.com