Gas stations out of supply, panic buying among the public, flight reductions! The global energy crisis is worsening, and many countries have launched emergency measures.

Gas stations out of supply, panic buying among the public, flight reductions! The global energy crisis is worsening, and many countries have launched emergency measures.

The global energy shock triggered by the Iran war is spreading outward at an unprecedented speed, from Asia-Pacific to Africa and then to Europe. Gas stations running out of supply, crowds lining up to buy fuel, and widespread flight cancellations are happening one after another. Multiple governments have been forced to rapidly roll out emergency intervention measures in a matter of days. A game of global demand destruction and policy response has now fully unfolded.

In the latest developments, Australian Prime Minister Anthony Albanese announced a three-month halving of the fuel excise tax to tackle gasoline prices hitting a 20-year high. Indian Finance Minister Nirmala Sitharaman imposed a heavy tax on diesel and aviation fuel exports while cutting domestic retail fuel taxes. Major Vietnamese airlines announced significant capacity reductions starting in April. Poland plans to cut fuel taxes and set price ceilings. The Czech government is considering controls on the retail profit margin at gas stations.

Pressure in the energy markets has directly transmitted to the transport sector. According to Bloomberg, European jet fuel prices have risen 114% since the outbreak of war, with Singapore fuel prices up about 140%. UBS warned that jet fuel shortages in Asia are causing more flight cancellations, with both Vietnam Airlines and Air New Zealand announcing reductions in certain routes. Previous Goldman Sachs data showed Asia is the focal point of this round of demand destruction, while a pathway analysis by JPMorgan's commodities team indicates the shockwave starts in Asia, affecting Africa and Europe sequentially before reaching the US.

Energy consultancy Wood Mackenzie warns that if Brent crude averages $100/barrel for four months, the fiscal impact on India would equal 0.7% of its GDP. Vietnam’s special subsidy fund may run out as early as early April, and Thailand’s equivalent fund is already in deficit, meaning some Asian governments could soon face financial limits.

Asia: Panic Buying Spreads, Gas Stations Widely Run Out of Supply

Australia is one of the most closely watched economies in this crisis. Reports indicate that one out of every seven fuel retailers in New South Wales has shortages of at least one type of fuel; an independent gas station in Cairns, Queensland has exhausted its supply of unleaded gasoline, and diesel prices are up 85% from before the war. Sydney’s diesel price reached 314.5 cents per litre, a new record high, with hundreds of stations nationwide reporting outages of at least one fuel variety this week.

Peter Khoury, spokesman for the National Roads and Motorists’ Association (NRMA), said the shortages mainly stem from stockpiling by the public rather than overall supply reduction—“People are hoarding fuel in jerry cans and storing them in their garages,” and freight companies are instructing drivers to “top up whenever they see diesel, even on half a tank.” PM Anthony Albanese’s tax reduction plan is expected to lower pump prices by about 26 Australian cents (approximately $0.18), and Treasurer Jim Chalmers projects the total cost of the measure at about A$2.55 billion, lowering CPI by about 0.5 percentage points.

The situation in Vietnam is equally severe. According to Bloomberg, Vietnam Airlines will suspend seven domestic routes from April 1, planning monthly reductions of 10-20% in flights next quarter, with domestic flight cancellations reaching up to 26% and international up to 18%. Low-cost carrier VietJet Air plans to cut overall capacity by 18% in April; Bamboo Airways will reduce daily flights to 15-17 per day. Over 80% of Vietnam’s crude oil imports come from the Middle East, and the government has urgently frozen some fuel taxes, effective until April 15.

Government Intervention Fully Upgraded: Export Restrictions, Tax Adjustments and Price Controls

Under the high pressure of supply chain disruptions, governments’ policy toolkits are rapidly expanding.

India’s response measures are particularly representative. According to Bloomberg, Finance Minister Nirmala Sitharaman announced an export tax of 21.5 rupees (about $0.23) per litre for diesel and 29.5 rupees per litre for jet fuel, while reducing domestic gasoline and diesel taxes each by 10 rupees/litre. Emkay Global Financial Services economist Madhavi Arora estimates that the tax reduction alone will cause an annual fiscal revenue loss of about 1.55 trillion rupees (around $16.4 billion). Severe shortages of LPG and LNG have previously triggered long queues outside gas stations. Meanwhile, multiple key states are about to hold elections, which further increases policy pressure on the Narendra Modi government.

Japan is tackling the issue from the energy structure. According to Reuters, the Ministry of Economy, Trade and Industry (METI) will temporarily lift the 50% capacity utilization cap for inefficient coal power plants starting April 1, for one year, expected to reduce LNG consumption by roughly 500,000 tons annually. Japan imports about 4 million tons of LNG annually through the Strait of Hormuz, about 6% of its total imports. Trade Minister Ryosei Akazawa said strategic oil reserves are principally prioritized for domestic refiners, and although the Philippines and Vietnam have requested assistance, there are currently no plans to directly supply reserves to neighboring countries.

In Thailand, the energy ministry requires refineries to disclose prices and inventory levels and strictly forbids sales above government-set prices. Diesel daily demand has jumped from the pre-conflict average of 67 million litres to about 87 million litres, with panic buying as the main driver of the surge. Even with the government raising retail prices, each litre of diesel is still subsidized by 19 baht (about $0.58), and the dedicated subsidy fund is in deficit by about 38 billion baht.

Africa and Europe: Crisis Expanding

The spillover effects of the energy crisis have extended into Africa and Europe. In Kenya, Vivo Energy (a Vitol Group subsidiary) admitted some locations experienced temporary shortages, mainly in remote areas. Martin Chomba, chairman of the Kenya Petroleum Independent Dealers Association, said, “Rural stations are hardest hit—we've lost access to competitively priced supplies,” with about 68% of stations being non-franchise and a “substantial number” unable to secure regular supply. Finance Minister John Mbadi announced the use of petroleum development tax to stabilize prices, but conceded that if the war continues, the situation could escalate to a “state of emergency.”

In Europe, according to Bloomberg, Czech Prime Minister Andrej Babis publicly criticized two major domestic fuel distributors for charging “outrageous” prices and singled out Poland’s Orlen SA and Hungary’s Mol Nyrt for immediate price cuts, saying they “should not profit from the Iran crisis.” Finance Minister Alena Schillerova said the government is seriously studying controls on gas station retail profit margins. Both companies said their prices are dictated by the market and international oil prices.

Polish PM Donald Tusk announced cuts to fuel VAT and consumption taxes, and the establishment of retail price ceilings that will adjust daily with wholesale prices, expecting a price reduction of up to 1.2 zloty per litre (about $0.32). The government also plans to tax windfall profits from refineries, directly impacting energy giant Orlen SA—whose shares dropped 6.7% after the news. According to EU Commission data, Polish gasoline prices have risen 22% since the Iran war began, with diesel up 40%, both significantly higher than the EU-27 average (gasoline about 15%, diesel about 26%).

Fiscal Limits Near: Subsidies Burn Fast and Policy Space Rapidly Narrows

Wood Mackenzie’s report notes that government interventions across Asia this round are the largest in history, but the fiscal costs to sustain these measures are equally staggering. Price controls and subsidy mechanisms are similar everywhere, essentially governments subsidizing consumers via various mechanisms—Japan and Malaysia compensate refiners and fuel suppliers, India freezes retail prices and has state oil companies absorb losses first, with the central government intervening via tax cuts once losses become unsustainable.

Among countries facing the highest fiscal pressure: Vietnam’s special subsidy fund is expected to run dry as early as early April; Thailand’s similar fund is already in deficit; Indonesia risks breaching its 3% statutory fiscal deficit cap; if oil prices remain high, India’s fiscal impact could equal 0.7% of GDP and 7.2% of government fiscal revenue. Wood Mackenzie states that fiscal deficits expanding across many Asian countries appears inevitable.

The firm warns, “If oil prices remain high, some Asian governments will soon hit a fiscal tipping point.” Once the current buffer of subsidies is exhausted, more drastic price adjustments or stricter demand-side controls will become unavoidable. While governments’ dense rollouts of policy interventions may help shore up livelihoods in the short term, should the war continue, phase two of the global energy crisis will be far harder to resolve than the first.

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