Asian policymakers must focus on stabilisation measures rather than price controls as Middle East tensions threaten energy supplies, inflation and financial stability
Asian economies should prioritise exchange-rate stability, liquidity support and targeted fiscal measures as tensions in the Middle East threaten global energy markets and trade flows, according to Albert Park, Chief Economist at the Asian Development Bank (ADB).
In a post on social media, Park said policymakers across Asia should focus on stabilisation policies rather than suppressing market price signals, as geopolitical tensions continue to disrupt global energy supply chains.
He cautioned that shielding consumers from higher domestic energy prices through price controls or broad subsidies could distort market incentives and weaken efficient resource allocation.
“Policies should focus on stabilisation rather than suppression of price signals,” Park noted, adding that central banks should prioritise exchange-rate smoothing and liquidity provision before tightening monetary policy aggressively.
He also emphasised the need for targeted fiscal support, instead of blanket subsidies, to protect vulnerable households from rising energy costs.
Park said policymakers should closely track shipping and logistics indicators along with oil prices, as disruptions in maritime trade routes could serve as early warning signals of wider economic fallout.
Asia remains particularly vulnerable to developments in Middle Eastern energy markets because most economies in the region are net importers of oil and natural gas. Between 2022 and 2024, net energy imports exceeded 2 per cent of GDP in many Asian economies, meaning even moderate increases in oil prices could significantly impact inflation and household incomes.
The Strait of Hormuz, located between Iran and Oman, is one of the world’s most critical energy chokepoints. Roughly 20 per cent of global seaborne oil and liquefied natural gas (LNG) passes through the narrow waterway.
Since the start of the conflict, Brent crude prices have risen around 11 per cent to about $83 per barrel as of March 6, reflecting rising concerns over potential supply disruptions.
Large Asian economies—including Japan, South Korea, India and China—remain highly exposed to developments in Middle Eastern energy markets due to their heavy dependence on imported crude oil.
Park also highlighted the importance of strategic petroleum reserves, noting that the size of emergency oil stockpiles could determine how resilient economies are to prolonged supply disruptions.
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