The conflict has disrupted a fifth of global oil and LNG supplies, forcing key Middle Eastern producers—including Saudi Arabia, UAE, Kuwait, Iraq, and Qatar—to cut output. Brent crude has risen 42% since late February, prompting the International Energy Agency to coordinate emergency oil releases, while the U.S. eased Russian oil sanctions.
| Photo Credit:
KHALIL ASHAWI
Governments from Asia
to Europe are scrambling to shield consumers from surging fuel
and food costs triggered by the U.S.-Israeli war on Iran,
rolling out measures ranging from fuel subsidies and price caps
to emergency commodity releases.
The conflict has halted a fifth of the world’s oil and
liquefied natural gas supply from the Middle East and forced top
regional energy producers Saudi Arabia, the United Arab
Emirates, Kuwait, Iraq and Qatar to cut output in what the
International Energy Agency termed the largest disruption to
energy supplies the world has ever endured.
The benchmark international Brent crude contract settled on
Friday at $102.90 a barrel, a 42% increase since the outset of
U.S.-Israeli strikes on Iran at the end of February. The IEA is
coordinating the largest-ever release of oil from emergency
stockpiles and the United States has eased sanctions on Russian
oil exports as a temporary salve for the supply shortage.
But countries most heavily dependent on energy imports are
facing soaring prices and fuel shortages due to the disruption
of shipping from the key Strait of Hormuz, where several vessels
have been attacked as Iran uses its position at the narrow
strait to blunt U.S. military power.
Governments are taking numerous steps to deal with the
magnitude of the shock to cushion businesses and households as
transportation and power bills rise. Some are leaning on
subsidizes to try to prevent rising fuel costs from trickling
into other parts of the economy, such as food prices and supply
chains.
“A central question is how long importers can sustain fuel
supply before shortages deepen,” said Natasha Kaneva, head of
global commodities research at J.P. Morgan, in a Friday research
note.
South Korean officials said they are considering providing
additional energy vouchers to subsidise vulnerable households if
rising fuel prices push up electricity bills.
The government is also preparing contingency plans to boost
nuclear and coal-fired power generation if LNG supplies from the
Middle East remain disrupted.
FOOD PRICE PRESSURES
Governments are also moving to prevent higher energy costs
from quickly feeding into food inflation.
In Egypt, authorities capped prices for unsubsidised bread sold
in private bakeries as rising fuel and transport costs threaten
to drive up food prices.
Bread is a staple for millions in the country, one of the
world’s largest wheat importers, making price increases
politically sensitive.
Concerns about rising farming costs have also prompted action in
China, which will release fertilizers from national reserves
ahead of the spring planting season to stabilise prices and
ensure farmers have adequate supplies.
POWER AND GAS MARKETS
Across Asia and Europe, governments are also stepping
directly into energy markets to cushion households from rising
fuel and power costs.
The Philippines said it may regulate electricity prices as soon
as next week while ramping up coal-fired generation to counter
soaring LNG costs. Benchmark LNG prices in northeast Asia fell
this week from three-year highs, but remain far above levels
from before the war started.
In India, authorities urged households not to panic-buy
liquefied petroleum gas cylinders and encouraged consumers to
switch to piped natural gas where possible to ease pressure on
supplies.
India consumed 33.15 million metric tons of cooking gas last
year, with imports accounting for about 60% of demand. About 90%
of those imports came from the Middle East.
Europe is also looking to safeguard gas flows, with
benchmark Dutch gas prices now about 50% higher than their
pre-war level.
The European Commission is preparing guidance that would allow
more flexible enforcement of certain gas import rules to avoid
delaying shipments needed to stabilise supplies during the
crisis.
Diplomats said the move could benefit imports from
Azerbaijan, whose pipeline gas reaches Europe through the
Southern Gas Corridor.
SUBSIDIES AND TAX RELIEF
Many governments are also turning to subsidies and fiscal
tools to contain rising prices.
In Malaysia, the government said it will increase spending on
petrol subsidies to about $510 million to keep the price of its
widely used midrange RON95 fuel fixed, and authorities in
Ethiopia sharply increased fuel subsidies to cushion consumers.
European governments are also weighing tax measures. Italy’s
Prime Minister Giorgia Meloni said the government is considering
cutting fuel excise duties while warning it could impose higher
taxes on companies seen as profiting excessively from the
crisis.
Australia said it would release petrol and diesel from domestic
reserves and temporarily loosen fuel quality standards to boost
available supply, particularly in rural areas facing shortages.
Brazil has cut diesel taxes and imposed a levy on crude exports
to help stabilise domestic fuel costs.
Published on March 14, 2026
