BAKU, Azerbaijan, March 26. Although Asia and the Pacific has limited direct trade exposure to Iran and other countries in the Middle East, economies in the region are highly vulnerable to spillovers transmitted through global energy markets, trade and transport networks, and financial conditions, the Asian Development Bank (ADB) says in its new research, Trend reports.
“The risk extends beyond oil production itself to include maritime transport through the Strait of Hormuz, a key transit route for global oil and liquefied natural gas (LNG) shipments;aviation corridors linking Asia and the Pacific with Europe; and already strained global shipping routes.
These transmission channels are particularly relevant for Asia and the Pacific, which is both the world’s largest energy-importing region and a central hub for global manufacturing and trade (ADB 2026). Asia and the Pacific’s vulnerability to the Middle East conflict stems in large part from its dependence on imported energy. The region is home to some of the world’s largest oil importers— including the People’s Republic of China (PRC), India, Japan, and the Republic of Korea. Most regional economies are substantial net importers of crude oil, refined oil products, and natural gas relative to their gross domestic product (GDP). This implies that even moderate increases in energy prices can generate significant income losses,” the report reads.
In late February 2026, Israel and the United States carried out major air and missile strikes on Iran, prompting a swift response from Tehran. Iran launched missiles and drones targeting Israel, as well as U.S. and allied positions across Gulf states and Cyprus. The hostilities have also extended to Lebanon.
The escalation has inflicted significant damage on the region’s energy infrastructure. Qatar suspended liquefied natural gas (LNG) production on March 2, and its facilities were subsequently attacked, disrupting nearly 20% of global LNG supply—equivalent to 8% of EU imports and 30% of China’s LNG imports in 2025. Saudi Aramco halted operations at Ras Tanura, the kingdom’s largest domestic refinery. Meanwhile, two of Israel’s largest offshore gas fields have been shut down, and production in Iraq’s key oil fields, including those in Iraqi Kurdistan, has been reduced or halted.
Maritime traffic through the Strait of Hormuz, the main export route for Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and the UAE, has sharply declined amid rising insurance costs and heightened security risks, even without an official closure. Approximately 18% of the world’s oil production flows through the strait, including refined products primarily destined for Asia, yet only about a quarter of this volume can be diverted through alternative ports on the Arabian Peninsula in the short term.
ADB analysts point out that Asia’s exposure to the conflict is further underscored by importsource concentration.
“Around 20% of global oil and LNG trade passes through the Strait of Hormuz, with Asia being the main destination. Japan sources around three-quarters of its oil consumption from the Middle East, and high dependence is similarly observed in Singapore, India, and the PRC. Because crude oil is traded in an integrated global market, a disruption in the Strait affects all net oil importers through higher world prices. However, Asia’s heavier reliance on Gulf suppliers also implies greater short-run exposure to shipping disruptions, higher transport and insurance costs, and temporary difficulties in replacing disrupted supplies. The exposure is similarly pronounced for LNG, as virtually all LNG transiting the Strait are destined for Asian importers,” reads the report.
The Bank notes that Strategic petroleum reserves may provide a short-term cushion to supply disruptions, but adequacy and coordination constraints may limit effectiveness. Asia and the Pacific is also exposed to the conflict through its deep integration into international trade and logistics networks.