The rising oil prices are a trending global issue at the moment, keeping certain economies tense and exposed to vulnerabilities. Oil prices have once again displayed a volatile stance, as US President Donald Trump continues to deliver aggressive comments about “taking over control of the Strait of Hormuz.” Such a scenario is weighing on the oil prices, with major Asian countries at risk. If oil touched $100 again, which of the Asian economies would be in the riskiest spot?
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Top Economies At Risk Again If Oil Prices Hit $100
Rising oil prices have now become a global menace as US-Iran dynamics have started to gain momentum once again. Both the countries are not showing signs of bowing down, standing firmly, which again, is pressuring the oil prices to react to the spiking tension. The oil prices have once again surged back to $91, as the US threatened Iran to “hit 20 times harder” if it does not allow the ships to pass through the Strait of Hormuz. Moreover, this situation has now left many countries exposed, as signs of surging oil prices may weigh on major Asian economies, worsening the matter globally.
Per the latest update by the Kobeissi Letter, certain Asian economies are at major risk if oil prices hit $100 again. To get things into perspective, the KL post outlines how oil prices surging from $70 to $85 can potentially impact Singapore’s GDP growth by 1.5%. For Taiwan, this development can impact its growth by 1.2%, followed by Hong Kong and India at 0.5% to 0.7% each. Moreover, countries like the Philippines, Malaysia, Thailand, and Indonesia are also at risk, which may impact their growth significantly.
“Which Asian countries are the most exposed to rising oil prices? Oil prices rising from $70 to $85 reduces Singapore’s real GDP growth by -1.5 percentage points, the largest hit in the region. Taiwan follows closely at -1.2 percentage points. Hong Kong, Korea, and India would see a reduction of -0.5 to -0.7 percentage points each. The Philippines, Malaysia, Thailand, and Indonesia face a hit of -0.3 to -0.5 percentage points. Meanwhile, China is the least exposed at -0.1 percentage points. As its oil imports are better diversified than those of its neighbors. With oil now at ~$100, far above the $85 modeled here, the real GDP impact across Asia is significantly larger. Most major Asian economies are highly exposed to oil price swings.”
20M Barrels at Stake
As the world continues to watch the US-Iran conflict continue for long, this dynamic involves 20M barrels of oil at stake, which, if not resolved soon, could drive major markets over time in the near future.
“The potential US-Iran disruption puts 20 million barrels on the table. The world currently has no spare capacity answer for that number. History’s four most notorious oil crises are stacked on top of each other. And we’re not at the top of that bar chart yet.”
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