Sunday’s escalation between Tel Aviv and Tehran sent shockwaves through the stock markets in Seoul, Tokyo and Taipei, dashing hopes of a swift return to stability following months of conflict in the Middle East. Whilst media attention is focused on the exchange of missile strikes in the Middle East, the real battle for resource security and geopolitical dominance is being fought in the Far East.
The fragile truce, which had so far given the global economy a moment’s respite, lay in ruins on Sunday, 7 June 2026. Following a massive missile attack by Hezbollah in the Yiftach region, Israel immediately launched an air strike on the group’s headquarters in southern Beirut. A spiral of retaliation quickly unfolded: Iran fired ballistic missiles at the Israeli Ramat David base, whilst Houthi terrorists resumed attacks on ships in the Red Sea. In addition, Israeli forces damaged the Karun petrochemical plant in the Mahshahr region of Iran, forcing the evacuation of workers from the special economic zone.
Monday, 8 June, saw a panic sell-off on Asian stock markets. Investors, fearing a new wave of inflation and interest rate hikes in the US, rushed to sell off expensive shares in companies linked to artificial intelligence technology. South Korea’s KOSPI index plummeted by 8.29 per cent, whilst the share prices of giants Samsung Electronics and SK Hynix fell by 10.2 per cent and 7.6 per cent respectively. Japan’s Nikkei 225 lost 3.85 per cent, Taiwan’s TAIEX fell by 3.5 per cent, and the Shanghai Composite closed 1.7 per cent down. Brent crude prices jumped by 3.7 per cent at the same time, exceeding the $88.50 per barrel mark.
Tensions reached a peak when Israeli fighter jets were already on the runways, ready for a massive strike on targets deep inside Iran. Prime Minister Benjamin Netanyahu called off the operation at the last minute following a warning from Donald Trump that, in the event of further escalation, Israel would be left to face the conflict alone. Although the US president announced the start of the “final phase” of peace negotiations, commodity markets no longer believe in empty declarations. The war in the Middle East, which began on 28 February 2026, has permanently embedded a huge geopolitical risk premium into industrial costs.
The Middle East is fighting, the Far East is suffering. Why is the crisis hitting Asia so hard?
In Poland and across Europe, petrol prices have risen, governments have introduced protective measures, and everyone is also expecting rising commodity prices due to higher transport costs. However, the crisis in the Strait of Hormuz poses a far greater threat to Asian markets. Why? The answer lies in the structure of raw material imports.
Twenty per cent of the world’s oil and liquefied natural gas flows through the Strait of Hormuz. North America, thanks to its own shale deposits, remains energy self-sufficient. Europe, in turn, has diversified its supplies thanks to pipelines from Norway and LNG imports from the US. Meanwhile, Asian countries have no choice – over 75 per cent of their oil imports and 59 per cent of their LNG imports must physically pass through the blocked Strait of Hormuz.
The differences in resilience between individual Asian countries are stark. Whilst China, Japan and South Korea have strategic oil reserves sufficient for over 200 days, developing countries have hit a brick wall. The Philippines, which imports 90 per cent of its oil from the Middle East, has reduced the working week to four days. Vietnam and Thailand are rationing electricity, Bangladesh has closed its universities, and Pakistan has closed its schools to conserve dwindling fuel supplies. Worse still, the paralysis of the Strait of Hormuz has hit imports of fertilisers, 34 per cent of which South Asia imports from the Persian Gulf. Without urea and with expensive diesel, farmers in the region are abandoning rice crops, which directly threatens food security.
Prolonged energy disruptions could force the economies of developing Asia and the Pacific to navigate a difficult trade-off between weaker growth and higher inflation, says Albert Partk, chief economist at the Asian Development Bank
Forecasts by the Asian Development Bank indicate that oil prices remaining at around $96 per barrel will cut the region’s GDP growth by 0.7 per cent, pushing inflation up to 5.2 per cent. This crisis has exposed the lack of a global stabiliser: the US took military action without consulting its Asian allies, leaving them with no resource buffer against the effects of the blockade.
China’s refining industry with its back against the wall
The commodities shock has hit the driving force behind the world’s second-largest economy – China’s refining sector – head-on. Can the Chinese giant absorb these losses indefinitely? China is the world’s largest importer of black liquid gold, bringing in between 11 and 11.5 million barrels a day. Before the outbreak of the war, nearly 1.4 million barrels of this total came from Iran, purchased at preferential prices. The blockade of the Strait of Hormuz and the surge in oil prices have drastically worsened the financial situation of Chinese refineries. The situation is exacerbated by the fact that Chinese refineries operate under a regime of regulated fuel prices on the domestic market. They cannot pass on the higher costs of purchasing oil to end-users, meaning that the entire financial loss is borne by their balance sheets. Furthermore, as a result of the global scramble for oil from outside the Middle East, the discounts on Russian oil – which had previously served as a protective shield for Chinese margins – have completely evaporated.
The operational consequences are staggering. In April 2026, oil processing in China fell to just 13.3 million barrels per day, reaching its lowest level since August 2022. The capacity utilisation rate plummeted to 69 per cent. State-owned giant Sinopec reduced the throughput of its refineries by 7.6 per cent. The crisis also forced investors to put key projects with a capacity of 500,000 barrels per day on hold. Construction of the strategic HAPCO Panjin refinery, a joint venture with Saudi Aramco, has been delayed by several months due to a lack of guarantees regarding raw material supplies. PetroChina, meanwhile, has indefinitely postponed the commissioning of a distillation unit in Dalian.
The gas sector suffered an equally painful blow. Iranian missile strikes on 18 March against the Ras Laffan area in Qatar destroyed QatarEnergy and ExxonMobil’s processing lines, removing 12.8 million tonnes of LNG per year from the market. Sinopec, a buyer of Qatari gas, was forced to resort to spot market purchases, where prices in Asia rose by over 140 per cent. As a result, the Chinese company’s LNG import segment alone recorded a loss of 830 million yuan (approximately $121.5 million) in the first quarter. Beijing reacted harshly: it banned the export of diesel and petrol to protect the domestic market and began releasing strategic oil reserves at a rate of up to 800,000 barrels a day.
The costly detour around Africa
The blockage of routes in the Middle East has disrupted global maritime logistics. Although, in theory, only the route through the Strait of Hormuz is blocked, many ships are also bypassing the Suez Canal due to the tense situation in the region. The decision to avoid the Suez Canal and sail around Africa via the Cape of Good Hope has extended voyages from Asia to Europe by two weeks, generating huge costs for shipowners.
Maersk CEO Vincent Clerc revealed that the company is spending around $500 million more each month due to the situation in the Strait of Hormuz, which is entirely passed on to customers in the form of higher freight rates. Rolf Habben Jansen, CEO of Hapag-Lloyd, has estimated his company’s additional expenditure at between 50 and 60 million euros per week. To offset these losses, carriers are introducing extraordinary seasonal surcharges and conflict risk premiums.
China as an unexpected beneficiary
These logistical and raw material disruptions are hitting Europe with a delay, but with double the force. The cut-off of LNG supplies from Qatar has coincided with critically low levels in European gas storage facilities, which stood at just 30 per cent of capacity following a cold winter. Prices for natural gas on the TTF exchange have almost doubled, exceeding the €60 per megawatt-hour mark.
Consequently, the European Central Bank was forced to revise its plans and postpone interest rate cuts. The European Commission has lowered its economic growth forecast for the eurozone in 2026 to a modest 1.1 per cent, whilst predicting a rise in inflation to 3.1 per cent. Europe’s energy-intensive industries – chemicals and steel – are already imposing surcharges of up to 30 per cent on their products, raising fears of the Old Continent’s permanent deindustrialisation.
In this global chaos, the only player systematically building its advantage is China. Capitalising on the fuel panic, Beijing is positioning itself as a provider of next-generation solutions. The drastic surge in oil and gas prices has forced developing countries to rapidly accelerate their energy transition. The only country capable of immediately supplying millions of solar panels, wind turbines and cheap electric vehicles on a mass scale is China, which controls these supply chains. The Middle Kingdom, despite the mediocre outlook for its petrochemical sector, may therefore ultimately emerge from this crisis unscathed.
