Following coordinated military strikes by the United States and Israel on Iran on 28 February 2026, which killed the country's supreme leader, the Strait of Hormuz has experienced ongoing geopolitical and economic disruption. In response, Iran launched retaliatory missile and drone attacks on US military bases, Israeli territory and other Gulf states, with the Islamic Revolutionary Guard Corps issuing warnings prohibiting vessel passage through the strait.
The effective closure of this vital waterway has created an acute energy crisis across Asia. Tanker traffic through the strait dropped approximately 70 per cent, with more than 150 ships anchoring outside to avoid risks, and soon traffic went to about zero. The disruption affects about 20 per cent of the world's daily oil supply and significant volumes of liquefied natural gas.
Governments across Asia have moved swiftly to impose emergency conservation measures. Thailand instructed agencies to adopt work-from-home arrangements and suspended non-essential overseas travel. The Philippines, which imports nearly all of its oil, has already begun a temporary four-day week for government workers. Vietnam's trade ministry has called on local businesses to encourage employees to work from home as part of efforts to save fuel amid supply disruptions and price surges, with Vietnam being among the countries hardest hit by fuel disruptions.
Additional measures reveal the scale of the panic. Thailand's government insisted that air conditioners be set to 26 degrees Celsius, whilst Vietnam warned that jet fuel shortages could emerge from early April. Pakistan's government considered implementing mandatory work-from-home policies and online classes to preserve fuel.
The economic consequences are spreading fast. Prices for gasoline in Vietnam have risen 32 per cent, diesel by 56 per cent and kerosene by 80 per cent since the end of February. From Thai farmers racing for diesel to Indian refinery executives monitoring the Persian Gulf through the night, energy buyers across import-dependent Asia are feeling the impact of a dramatic crunch.
Compounding the fuel shortage, Thailand suspended its crude and petroleum exports on March 1, while China ordered its largest oil refineries to halt diesel and petrol exports on March 5. This defensive move by governments protecting domestic supplies signals how serious the shortage has become.
On the military front, the Royal Australian Air Force will deploy a Boeing E-7A Wedgetail in the Gulf region for weeks, with the aircraft departing Australia on 10 March 2026. Prime Minister Anthony Albanese cited 115,000 Australians living in the Middle East, among them 24,000 in the UAE, as a major factor behind the deployment of military assets. Australian advanced and medium-range air-to-air missiles will also be provided to the UAE.
The Albanese government emphasised it is not taking offensive action against Iran and is not deploying Australian troops on the ground in Iran. The E-7A Wedgetail was recently deployed to Europe as part of Australia's assistance to Ukraine.
Whether the conservation measures and military support can stabilise the region depends on how quickly the Strait of Hormuz reopens. The next two weeks are critical; prolonged disruption could worsen fuel costs and affect food prices. In Asia, Thailand, India, Korea and the Philippines are the most vulnerable to higher oil prices due to their high import dependence.