MANILA, July 19 — Global oil prices climbed roughly 2% in the hours after a January 28 attack, with Brent crude trading above $83 a barrel the following day, and analysts say the market is pricing in a broader Middle East conflict that could directly hit Asian economies. The attack sharpened focus on the Strait of Hormuz, a narrow waterway through which about a fifth of the world’s oil passes. Iran has in the past threatened to close the strait, and the fresh geopolitical risk premium reflects that possibility.
Markets are now assessing the potential for a wider confrontation that could disrupt output from major producers Iraq – pumping around 4.5 million barrels per day – and Saudi Arabia, at roughly 9 million barrels per day. The U.S. Energy Information Administration has warned that any meaningful disruption in the Persian Gulf could push oil prices above $100 a barrel.
Shipping risks and rising costs
Closer to home, the impact is already rippling through supply chains. Shipping insurance premiums for vessels transiting the Red Sea and Gulf of Aden have been climbing since Houthi attacks began in November 2023. The Jordan attack, which occurred on the same day as the Strait of Hormuz concerns, may further deter shipping companies, increasing freight costs and delivery delays across regional trade lanes.
For communities in the Philippines and across Southeast Asia that depend on imported oil and goods moved through those corridors, higher transport costs eventually translate into higher prices for everything from fuel to food. Defense stocks, notably Lockheed Martin and RTX, saw slight gains as markets anticipated higher military spending by governments bracing for a prolonged period of instability.
The Federal Reserve is monitoring these developments for signs of inflationary pressure, which could influence U.S. interest rate decisions – a factor that feeds into currency movements and borrowing costs for emerging Asian economies.
What it means for the region
For families across Asia, the immediate effect is not a dramatic jump at the petrol station overnight, but a slow grind: higher import bills for countries that buy oil, weaker currencies against the dollar, and delayed goods. The Strait of Hormuz chokepoint is particularly critical for Asian buyers – nations like Japan, South Korea, India, and the Philippines import the vast majority of their crude from the Middle East.
Any sustained disruption there would force them to tap strategic reserves or seek costlier alternative supplies, a scenario that the EIA’s warning above $100 a barrel makes all too real. The Houthi campaign in the Red Sea has already forced some shipping lines to reroute around the Cape of Good Hope, adding weeks to voyage times.
The attack in Jordan may accelerate that trend, pushing insurance premiums higher and further tightening capacity for container vessels and tankers serving Asian ports. All eyes remain on the Persian Gulf and the Red Sea. Investors, policymakers, and ordinary consumers across the region will be watching for any escalation that threatens the flow of oil through these vital waterways – and for the price signals that follow.
