Picture This: What Middle East Supply Disruptions Mean for the Asia-Pacific Region

Supply risks for Asian economies and industries have broadened to refined fuels, fertilizers and industrial inputs and are amplified by intra-regional dependencies.

What we know

Despite the announced two-week ceasefire, the resumption of hostilities in the Middle East war remains likely. The existing damage and ongoing risks to shipping and infrastructure assets in and around the Gulf Cooperation Council (GCC) have broadened supply chain risks beyond crude oil and LNG, with resulting shortages threatening significant economic damage across Asia-Pacific economies.

Why it matters

Economies with limited domestic refining capacity are particularly vulnerable to a supply squeeze because their regional suppliers are likely to prioritize their own markets first. For example, if a key refiner’s crude imports from the Middle East were disrupted, it would likely redirect its output domestically, reducing the volume of refined fuels available for export.

This vulnerability is starkly illustrated by economies like Australia and New Zealand. Despite having minimal direct exposure to the Middle East, they are highly dependent on regional refiners. Australia sources 51% of its refined oil from South Korea and Singapore combined, while New Zealand relies on the same two markets for 78% of its supply, according to S&P Global Market Intelligence data. Similarly, Hong Kong imports over half of its refined energy products from mainland China.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.