The Tamesis
Energy suppliers across Asia are being forced to use more coal to generate electricity as the war in Iran hampers access to oil and gas from the Middle East.
Crude oil prices rose nearly 3% on Tuesday after Iran launched further attacks on the United Arab Emirates. Attack ships violating the blockade Oil tankers passing through the Persian Gulf and Strait of Hormuz, as well as production facilities in neighboring countries, have been affected, causing some countries such as Qatar to halt shipments.
Spot LNG prices in Asia have doubled to a three-year high in the second major supply shock in four years, with analysts expecting the conflict to sharply reduce LNG import demand this year. Reuters reported. Oil and fertilizer prices also rose sharply.
See also: Oil crisis: US allows Iranian tankers to pass through Strait of Hormuz
The overall impact is huge. Countries around the world have been forced to consider a range of other options, and early indications are that many will choose coal-fired power, in part because it is one of the quickest, easiest and cheapest alternatives to a crisis that most hope will not become a long-term problem.
The governments of Bangladesh, the Philippines, Vietnam, Thailand and even Japan are now considering coal-fired power generation along with a range of other measures until the crisis is over.
For South Korea, the main options are coal and nuclear power. But so far, only Pakistan and Indonesia have said they may make greater use of solar power in the short term. Indonesia has stopped gas exports and is looking to increase the use of biodiesel, but it gets most of its LNG through Singapore.
India looks likely to import more crude from Russia as new Thai government It has also expressed interest in buying oil from Russia as well as other producers.
China, meanwhile, has large reserves that can last two to three months, but a prolonged disruption could cause it to use more coal power.
If lockdowns in the Middle East are extended, many analysts expect the shift toward renewable energy, especially solar, to intensify.
Fitch rating agency Pakistan and India are among the emerging markets most vulnerable to the ongoing blockade of the Strait of Hormuz, which normally handles about a fifth of the world’s oil supplies.
“For most major emerging markets, higher oil and gas prices will lead to a deterioration in terms of trade,” Fitch said. “This is most pronounced in Morocco, Pakistan and Thailand, where energy deficits exceed 4% of GDP.”
China asks to postpone summit
U.S. President Donald Trump said on Monday he had asked Beijing to postpone a summit with Xi Jinping because he needed to travel to Washington to deal with war issues.
“I wanted to be here because of the war. I had to be here. So we asked for a delay of about a month,” Trump told reporters.
Neil Thomas, China politics researcher at Asia Society, told Reuters: “Trump is busy resolving the Iran war, which is not being resolved as quickly as expected, so he is eager to ensure that the resulting military and economic fallout is contained in the next few weeks or so… This means that a planned successful visit to Beijing is almost impossible.”
“From China’s perspective, Beijing is very concerned about the lack of preparations on the U.S. side for the summit, so Chinese policymakers won’t mind a few extra weeks to prepare for a more substantive visit.”
“The Wall Street Journal” chief China analyst Wei Lingling said in an email today that the United States seems to have realized that China’s state-led industrial drive will not collapse due to U.S. pressure, “so the goal has shifted from transformation to pure transaction containment.”
Trump administration activates Section 301 Investigating global manufacturing overcapacity and the failure of more than a dozen countries, including China, to curb forced labor in their supply chain.
She said the first goal now is to reestablish the tariff rates recently ruled by the U.S. Supreme Court. The new investigation would give the White House the authority to return tariff levels to what China “had become accustomed to” late last year.
“A trade deal worth trillions of dollars?”
But she noted there was also speculation that a massive bilateral trade deal could impress Trump and allow China to obtain advanced computer chips “to take a more proactive stance against Taiwanese independence.”
“Those skeptics worry that if Beijing offers trillions of dollars in commitments, the United States may try to trade its regulatory guardrails for a historic victory,” Wei wrote.
“For many in Washington and elsewhere, it’s a sobering thought: The structural reforms that once defined the U.S.-China economic war may be replaced by purchase orders and investment checks — while the geopolitical landscape shifts beneath our feet.”
The other big news on Tuesday was Israel’s claim to have killed Iran’s powerful national security chief Ali Larijani and the commander of Tehran’s Basij military forces. Tehran has yet to respond.
Meanwhile, Australia is worried about Trump’s Decided to send aircraft carriers and other ships normally stationed in the Indo-Pacific to the GulfThe addition of 2,500 Japanese marines and Japanese and South Korean missile batteries and interceptor missiles weakens its power in the region and undermines its credibility and ability to deter Chinese aggression.
See also:
Top Chinese cobalt mine causing illness, death in Democratic Republic of Congo, report says
Iran threatens to ‘destroy world economy’ as more ships attacked
Iran says three ships attacked, ready for $200 a barrel price
China ‘weaponizes bottlenecks’ by restricting exports of key rare earths
India delays talks, China says ‘cancel tariffs’ after US ruling
China exploits Trump’s ‘uncertainty’ to dominate global trade, report says
Japan agrees to make first $36 billion investment in U.S.
Trump cuts U.S. tariffs to 47%, Xi Jinping vows to ease rare earth restrictions
