West Asia Energy Shock More Than Doubles Asia’s Fuel Costs As Supply Disruptions Bite

The West Asia energy crisis is pushing fuel costs across Asia to more than double their pre-war levels, as disruptions spread beyond crude oil to refining operations and shipping networks. Despite a partial recovery in crude supplies, renewed attacks on Gulf energy infrastructure and shipping routes are putting pressure on global energy buffers, according to a report by BlackRock.

The global investment management firm said rerouted shipments, existing inventories and strategic reserves initially helped countries manage disruptions to crude supplies. However, the situation has worsened as attacks on energy infrastructure and shipping routes have created fresh bottlenecks in the supply chain.

"Now scarcity has shifted downstream," BlackRock said, pointing to shortages in refining capacity and shipping constraints that have pushed fuel costs higher even as crude supplies begin to recover.

Brent crude surged to around $117 per barrel on October 23, its highest level since April. Prices subsequently eased to $110.18 per barrel, down 2.87 per cent at the time of the report.

The impact has been particularly visible in the downstream oil industry. Shares of refining companies have climbed around 160 per cent this year, while tanker operators have gained approximately 120 per cent. In comparison, major oil and gas producers have recorded gains of around 40 per cent, reflecting how supply bottlenecks are benefiting some segments while increasing costs across the wider economy.

BlackRock said the economic impact varies across regions, with Europe emerging as particularly vulnerable. The energy shock has reduced Europe's gross domestic product (GDP) by an estimated 0.5 per cent, compared with a 0.1 per cent impact on the US economy.

Europe is also facing pressure on natural gas supplies. Gas storage levels stood at around 75 per cent, the lowest seasonal level since recordkeeping began in 2011. Disruptions to liquefied natural gas (LNG) supplies could make the situation more difficult, particularly if the region experiences a colder-than-expected winter. European energy prices have already risen 170 per cent this year, according to BlackRock.

The United States remains relatively insulated because it is a net energy exporter. Meanwhile, strong technology exports have helped Asia offset some of the economic pressure from higher energy import costs.

However, BlackRock warned that the consequences could continue even after the conflict ends, as governments and businesses prioritise energy security, alternative supply routes and infrastructure investments.