September 9, 2026
William Pesek
Policymakers from Tokyo to Jakarta are watching crude approach $100 a barrel again. Goldman Sachs is warning of $120 oil, pointing to intensifying attacks on shipping through the Strait of Hormuz and the Red Sea as the most likely trigger for a fresh price spike. Goldman economist Daan Struyven flagged the risk that supply-chain disruptions are broadening and intensifying.
Not everyone agrees the renewed strikes between the US and Iran mark a turning point. Rystad Energy’s Jorge León is skeptical that either side is escalating meaningfully or that conditions have materially shifted over the past two weeks.
Still, a conflict President Trump once predicted would last only weeks is approaching its seventh month, and tight oil supplies pose a clear danger to Asia’s import-dependent growth models. Just as troubling: the region’s toolkit for absorbing another Middle East oil shock is far more depleted than it was the first time around.
Through much of 2026, Asian governments and investors bet the Iran war would be short-lived. Hopes that cooler heads would prevail in Washington and Tehran haven’t materialized.
Trump, facing a war sliding into quagmire territory ahead of November’s congressional elections, appears increasingly eager to find an exit. His poll numbers have slumped into the low 30s as even Republicans grow uneasy about the war and a shaky economy — a striking reversal for a president who campaigned on extracting the US from foreign conflicts, only to start one it may not be able to win.
As oil prices climb again, Asian governments are confronting subsidy budgets already strained by the crisis’s first phase. India, Indonesia and the Philippines spent heavily defending their currencies and cushioning consumers from fuel price spikes. Bangladesh is grappling with severe power shortages. There is simply less fiscal room left to absorb another oil shock, particularly if shipping disruptions worsen with no end in sight.
A resurgent US dollar isn’t helping. Its strength is compounding inflation risks across Asia as local currencies weaken. The region is bracing for Friday’s US inflation report, which could all but lock in a Federal Reserve rate hike next week.
William Pesek
No one needs a more destabilizing
oil surge as Trump’s war, tariffs and efforts to control Fed policy erode trust
in the dollar and US government debt
Asia’s long resilience to turmoil
in the Strait of Hormuz is wearing thin. After months of burning through
reserves and shielding consumers from the worst of it, the region’s oil
importers are running out of room — and a shock that once looked containable is
now poised to bite hard.
Policymakers from Tokyo to Jakarta are watching crude approach $100 a barrel again. Goldman Sachs is warning of $120 oil, pointing to intensifying attacks on shipping through the Strait of Hormuz and the Red Sea as the most likely trigger for a fresh price spike. Goldman economist Daan Struyven flagged the risk that supply-chain disruptions are broadening and intensifying.
Not everyone agrees the renewed strikes between the US and Iran mark a turning point. Rystad Energy’s Jorge León is skeptical that either side is escalating meaningfully or that conditions have materially shifted over the past two weeks.
Still, a conflict President Trump once predicted would last only weeks is approaching its seventh month, and tight oil supplies pose a clear danger to Asia’s import-dependent growth models. Just as troubling: the region’s toolkit for absorbing another Middle East oil shock is far more depleted than it was the first time around.
Through much of 2026, Asian governments and investors bet the Iran war would be short-lived. Hopes that cooler heads would prevail in Washington and Tehran haven’t materialized.
Trump, facing a war sliding into quagmire territory ahead of November’s congressional elections, appears increasingly eager to find an exit. His poll numbers have slumped into the low 30s as even Republicans grow uneasy about the war and a shaky economy — a striking reversal for a president who campaigned on extracting the US from foreign conflicts, only to start one it may not be able to win.
As oil prices climb again, Asian governments are confronting subsidy budgets already strained by the crisis’s first phase. India, Indonesia and the Philippines spent heavily defending their currencies and cushioning consumers from fuel price spikes. Bangladesh is grappling with severe power shortages. There is simply less fiscal room left to absorb another oil shock, particularly if shipping disruptions worsen with no end in sight.
A resurgent US dollar isn’t helping. Its strength is compounding inflation risks across Asia as local currencies weaken. The region is bracing for Friday’s US inflation report, which could all but lock in a Federal Reserve rate hike next week.
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