Sri Lanka, Malaysia assess economic fallout from Middle East oil crisis

ISTANBUL

Sri Lanka and Malaysia moved Wednesday to assess the economic fallout from rising oil prices linked to the Middle East conflict, joining Pakistan, Bangladesh and Thailand, which have already introduced austerity measures.

Pakistan, Bangladesh, Thailand, India, South Korea, and Nepal rely heavily on imported oil, leaving them particularly exposed to supply disruptions and higher energy costs.

Trinh Nguyen, a senior economist at Natixis, said on the US social media company X: “Demand destruction happening. First, Pakistan and Bangladesh. Next, Southeast Asia.”

In Kuala Lumpur, Prime Minister Anwar Ibrahim said his government will hold a special two-day Cabinet meeting on Friday to review Malaysia’s fiscal position, state-run Bernama reported.

Malaysia’s status as a net energy exporter helps shield it from immediate shortages, and officials say petroleum supplies are sufficient through at least May.

Sri Lanka’s Parliament is scheduled to hold a two-day debate next week on the Middle East conflict and its potential impact on the country’s fuel imports, the Daily Mirror reported.

Pakistan and Bangladesh have introduced austerity measures including work-from-home policies, reduced transportation and fuel rationing, while Thailand has cut energy consumption in government offices and encouraged remote work.

Bangladesh has also secured oil supplies from Malaysia, India and Singapore to reduce reliance on traditional suppliers amid disruptions.

Nepal said it will send a chartered flight to Dubai on Wednesday to evacuate stranded passengers as tensions rise across the region.

About 700,000 Nepali workers live in the United Arab Emirates, where concerns have grown following the death of a Nepali security guard in a drone attack at Dubai’s Zayed International Airport.

In South Korea, Son Joo-suk, head of the Korea National Oil Corp., apologized Wednesday for steep price increases at some government-run fuel stations as costs rise amid the conflict, Yonhap reported.

India, which imports nearly 90% of its crude oil, has so far absorbed price shocks. However, Moody’s warned that the country remains vulnerable because strategic petroleum reserves cover only about 10 days of consumption while commercial stocks cover roughly 65 days.

Regional tensions escalated after the US and Israel launched a joint attack on Iran on Feb. 28, which Tehran says killed more than 1,200 people, including former Supreme Leader Ayatollah Ali Khamenei and 150 schoolgirls.

Iran has retaliated with drone and missile strikes targeting Israel, Jordan, Iraq and Gulf countries hosting US military assets.

Tehran has also effectively closed the Strait of Hormuz since around March 1.

The narrow shipping route normally carries about 20 million barrels of oil per day and roughly 20% of global liquefied natural gas trade.