Asian Economies Cut Back Oil Demand Amid Middle East Supply Disruptions

Asian economies have been forced to reduce their oil demand due to disruptions in supplies from the Middle East. The impact of the US-Iran war has led governments in the region to implement policies aimed at reducing dependence on oil, such as increasing support for electrified transport and biofuel mandates.

The conflict began in February 2026, when Iran's near-closure of the Strait of Hormuz cut off Asia's access to nearly 60% of its crude and refined products imports. Governments responded by rationing supply and encouraging people to work from home. Refiners dipped into inventories until May, when replacement cargoes started arriving.

Despite some buffers helping to limit Asia's crude supply shortages, refined product supplies remain tight. China's temporary pullback on imports and moves by Middle East suppliers to sneakily push flows through the strait have helped mitigate the situation.