Asia oil supply: OK -- unless Gulf war widens
Singapore — Asian countries face no serious short-term oil-supply threat from the continuing war between Iran and Iraq. But problems could arise -- particularly for Japan, Thailand, the Philippines , and South Korea -- if the fighting persists or escalates to affect other oil-producing Middle Eastern countries.
Little immediate impact is foreseen becuase Asian countries get relatively little of their imports from Iran and Iraq. In addition, existing stockpiles would help cushion any short-term shortages that might result from damage to facilities there.
Still, much of the region gets substantial oil supplied from Kuwait and Saudi Arabia. If the war spreads to block this oil from passing through the Strait of Hormuz, the squeeze on Asia could tighten.
Hostilities in the strait also could drive up oil prices by raising insurance rates for tankers. And any contraction in world supplies might boost prices and balance-of-payment deficits for the import-dependent countries.
Thailand would be particularly hit hard since about 90 percent of its imports pass through the narrow strait. An estimated 70 percent of Japan's imports pass through the waterway, as do 64 percent of the Philippines's, and about 95 percent of South Korea's.
All of these countries are somewhat insulated by stockpiles. Japan has a 111 -day reserve, Thailand a two-month supply, and the Philippines at least a 100 -day reserve. South Korea is believed to have less than a 30-day reserve.
Singapore, the world's third-largest oil refiner, exports more than 75 percent of the crude it imports. Some 75 to 85 percent of this passes through the strait. Refineries supplying domestic needs are reported to keep about a 40 -day supply of crude on hand.
Less affected by any cutoff would be oil- rich Malaysia, which produces 60 percent of its own supply. The remaining 40 percent comes from Kuwait and Saudi Arabia, and thus is vulnerable to any disruption at the Strait of Hormuz.
Indirectly, Hong Kong could be affected by a prolonged Gulf stoppage since part of its oil comes from Singapore. China supplies the rest. Resource-rich China is largely immune to whatever happens in the Gulf. Similarly, Indonesia is also largely self-sufficient, importing only small quantities of refined oil from Singapore.
Nevertheless, the destruction of oil facilities in Iran and Iraq is expected to have some effect on Asian economies, depending on where the damage occurs and how extensive it is.
The Philippines gets 18 percent of its imports from Iraq, but none from Iran. South Korea gets 5 percent of its imports from Iran, but none from Iraq. Singapore imports 10 to 15 percent of its supplies from Iraq and very little from Iran. About 10 percent of Japan's supplies come from Iraq.