Oil-thirsty Asia watches Arab unrest

By Daniel Rook ,AFP

BANGKOK — The tremors from political upheaval in the Middle East are rippling through energy-thirsty Asia, which has long struggled to kick its addiction to oil from the volatile region. Every day millions of barrels of oil pass through the Indian Ocean from the Middle East to Asia, the world’s busiest route for supertankers, providing energy to fuel the region’s rapid economic growth. It’s an intercontinental voyage that highlights the ever-increasing interdependence of the world economies and explains why the fallout from unrest in the Middle East is having an impact thousands of miles (kilometers) away. Oil prices have skyrocketed on world markets on fears that uprisings in countries such as Egypt and Libya could spread to major oil producers including Saudi Arabia and Algeria.

The effects are already being felt by motorists in Asia, which relies on the Middle East for the vast majority of its oil imports. Resource-poor Japan for example buys 90 percent of its crude from the Middle East, while Singapore gets about 85 percent of its needs from the region and South Korea about 82 percent. But it is the developing countries that might be the hardest hit by the price spike. “India and Thailand would struggle most within Asia if oil prices were to remain at their current level,” said Mark Williams, a senior economist at the London-based research firm Capital Economics. “The region’s biggest loser would probably be India. Its current account deficit is already high, its economy is oil-intensive, and fuel subsidies are a drain on already stretched government resources,” he said. “Thailand too is exposed due to its high reliance on oil and the large potential knock-on impact on inflation.” Rising consumer prices are emerging as a top concern for policymakers in the region. High energy prices — which also tend to push up food costs through increased transportation costs — have even triggered social unrest in Asia in the past. In the Philippines, price surges led to riots in the late 1980s as communist guerrillas burned buses amid street protests. Indonesia, an oil producer, saw violent protests in 2008 in response to a steep rise in fuel prices. Late dictator Suharto’s decision to hike fuel prices in 1998 fanned unrest that eventually toppled his regime.