SINGAPORE: Governments in Asia are scrambling to limit the impact on economies and consumers from the widening Iran war, which fuelled a record surge in oil prices on Monday after key producers cut output and Tehran signalled that hardliners will remain in charge.
In South Korea, which buys 70% of its oil from the Middle East, President Lee Jae Myung said Seoul would cap fuel prices for the first time in nearly 30 years and warned against panic buying.
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Speaking at an emergency meeting, Lee called the crisis "a significant burden on our economy, which is highly dependent on global trade and energy imports from the Middle East."
A senior Japanese parliament member said on Sunday that the government had instructed a national oil reserve storage site to prepare for a possible crude release, although the country's chief cabinet secretary said on Monday that no decision had been made to release stockpiles.
Japan imports around 95% of its oil from the Middle East. It has reserves to cover 354 days of consumption.
Elsewhere, Vietnam removed import tariffs on fuels and Bangladesh shut universities to conserve electricity and fuel, while China last week asked refiners to halt fuel exports and try to cancel shipments already committed.
TRUMP DOWNPLAYS U.S. PRICE SURGE
U.S. President Donald Trump tried to tamp down concern about rising U.S. gasoline prices, which were up 11% for the week on Friday, while Senate Minority Leader Chuck Schumer called on him to sell oil from the Strategic Petroleum Reserve.
"Short term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for U.S.A., and World, Safety and Peace," Trump posted on Truth Social on Sunday night. "ONLY FOOLS WOULD THINK DIFFERENTLY!"
Oil jumped 25%, with Brent on track for a record one-day gain, after Iran on Monday named Mojtaba Khamenei to succeed his father Ali Khamenei as supreme leader, while OPEC producers Kuwait and Iraq cut oil output during the weekend as the crucial Strait of Hormuz remained effectively shut.
BRENT JUMPS 25% ON SUPPLY FEARS
Across Asia, which sources 60% of its oil from the Middle East, stock prices slid and the dollar rose, with officials looking to contain the impact of oil prices, including weighing the release of strategic reserves, as worries mounted that disruption in energy supplies could be prolonged.
Iran on Monday named Mojtaba Khamenei to succeed his father Ali Khamenei as supreme leader, a move expected to draw the ire of Trump. Weekend attacks on Iranian oil storage facilities fueled fears of retaliatory strikes on energy facilities.
"Oil prices have now gathered all the ingredients for a perfect storm - Middle East Gulf producers cutting output, the prolonged closure of the Strait of Hormuz ... all compounded by a growing pessimism about a quick turnaround in the current situation," said Kpler senior oil analyst Muyu Xu.
Iraq cut oil production from its main southern oilfields by 70% to 1.3 million barrels per day, three industry sources said on Sunday, while Kuwait Petroleum Corp began cutting oil output on Saturday and declared force majeure.
No.2 LNG exporter Qatar has already halted exports of the superchilled fuel, and analysts predict that the United Arab Emirates and Saudi Arabia will also have to cut output soon as they run out of oil storage due to the Strait of Hormuz closure.
