A month into the conflict in the Middle East, its effects are being felt in various economies around the world. The crisis erupted on February 28, when the United States and Israel launched joint strikes on Iran, setting off a series of events that tightened Tehran’s grip on the strategically vital Strait of Hormuz.
This narrow sea corridor, which connects the Persian Gulf to the Gulf of Oman and the Arabian Sea, remains one of the most important energy routes in the world. It extends at its narrowest borders to only 29 nautical miles, with limited shipping channels. With about 20 million barrels of oil transported daily, nearly a quarter of global seaborne trade, any disruption here has far-reaching consequences. With supplies under pressure, countries are scrambling to manage the fallout while protecting consumers through a mix of policy responses.
While some raised fuel prices, others restructured taxes to protect consumers.
Vietnam
Consumers in Vietnam breathed a sigh of relief after the country reduced fuel prices. Faced with a sharp rise in fuel costs, Vietnam has taken emergency measures to control costs. The authorities suspended environmental protection taxes on gasoline, diesel and jet fuel until mid-April, in an attempt to stabilize the local market.
The Commerce Department called the move “an urgent and effective solution to stabilize the oil market and ensure national energy security amid the escalating conflict in the Strait of Hormuz, which is creating the ‘largest energy bottleneck ever.’” The move led to a sharp drop in prices, with gasoline down nearly 26% and diesel more than 15% after previous highs.
Venezuela
In Venezuela, prolonged high temperatures have intensified pressure on an already strained energy system, prompting the government to curtail activity.
Interim President Delcy Rodriguez announced a week-long suspension of work in the public sector, including education, as part of a campaign to save electricity. “During this Holy Week, I want to announce that I have issued vacation days on Monday, Tuesday, Wednesday, Thursday and Friday for the entire education sector,” she said, adding that the country had suffered “45 days of high temperatures.” While basic services will remain operational, this move reflects the ongoing challenges in managing electricity demand.
India
In India, the government has taken a range of steps to protect consumers and businesses from the ongoing energy supply crisis. With the sharp rise in refining costs, the government has reduced excise duty on petrol and diesel by Rs 10 per litre, despite the impact on state revenues. At the same time, export duties were imposed on diesel and aviation turbine fuel to manage supply pressures. Officials insisted there was no shortage of petrol, diesel or LPG, dismissing the disruption claims as a “coordinated disinformation campaign”.
Domestic LPG availability remains stable, with production increasing and states required to expand commercial distribution.
Pakistan
Pakistan is facing increasing pressure from rising fuel costs, with the government selectively adjusting prices while trying to protect consumers. Kerosene prices were increased by PKR 4.66 per liter to PKR 433.40, effective March 28, even as petrol and diesel prices remained unchanged at PKR 321.17 and PKR 335.86 per litre.
The authorities said the decision aims to protect consumers from global price fluctuations, with the state absorbing part of the burden by paying PKR 95.59 per liter on gasoline and PKR 203.88 per liter on diesel to oil marketing companies. Meanwhile, jet fuel prices rose sharply, rising for the fifth time in 28 days. The recent increase of PKR 5 per liter has pushed jet fuel to a record high of PKR 476.97 per litre, compared to PKR 188 at the beginning of March – a jump of PKR 288.
Airlines have already hiked prices, with one-way domestic ticket prices on routes such as Karachi-Islamabad and Karachi-Lahore reaching PKR 40,000, while Opportunity Seat fares have risen by up to 150%.
Amid these pressures, work patterns are also being modified in response to energy pressure, with measures to reduce overall fuel consumption forming part of the broader response.
Egypt
Egypt imposed a series of temporary restrictions to reduce energy consumption as fuel costs rise.
Retail outlets, restaurants and cafes are now required to close by 21:00 every night, along with measures such as reducing street lighting and limiting remote working. The government described these measures as “exceptional” in response to increasing pressure on energy supplies. Egyptian Prime Minister Mostafa Madbouly said that the country’s spending on gasoline has doubled in recent months. Although tourism-related businesses are exempt, the broader economy is feeling the pressure, especially due to reliance on imported fuel.
Sri Lanka
Sri Lanka is tightening energy use as supply disruptions continue to put pressure on the country’s fuel system. With about 60% of its energy needs imported and limited reserves covering barely one month, the authorities have reintroduced the QR-based rationing system. Weekly limits have been set, including eight liters for motorcycles, 20 liters for tuk-tuks, 25 liters for cars, 100 liters of diesel for buses, and 200 liters for trucks. Fuel prices have also increased by about 33 percent since the beginning of the war, increasing pressure on families. To curb consumption, the government introduced a no-work policy on Wednesday, closing offices and schools on that day. Besides fuel shortages, Sri Lankan citizens are also experiencing interruptions in fertilizer supplies which could lead to food prices rising, with estimates suggesting a potential increase of 15%, further exacerbating cost of living pressures.
