Middle East Crisis Drives Up Oil Prices; Logistics Stalled and Goods Scarce in Myanmar

The surge in oil prices triggered by the Middle East crisis is severely hitting Myanmar's retail industry and consumer economy. Under the double pressure of high fuel prices and supply chain disruptions, not only have major e-commerce platforms been forced to exit the market, but the problem of goods shortages continues to worsen, posing a severe challenge to the newly inaugurated government. According to Nikkei Asia, Shop.com.mm, operated by the major Pakistani online retailer Daraz, announced on April 27 that the Myanmar online mall would soon cease operations. The official statement said, "This was not a hasty decision." Daraz primarily operates in the South Asian market and was acquired by Chinese e-commerce giant Alibaba Group in 2018. Daraz did not explain the reason for its withdrawal from Myanmar, and a spokesperson declined to comment beyond the official statement. However, industry insiders revealed that this move is believed to be influenced by the Iran war and the procurement and logistics difficulties that have persisted in recent years. Since the military seized power and overthrew the elected government in 2021, conflicts between the military and resistance forces have continued within Myanmar. Foreign investment and exports have stalled, leading to foreign exchange shortages, a weak local currency, and high import prices. Authorities have adopted import restriction measures to prevent foreign exchange outflows, further worsening the shortage of materials and inflation, creating a vicious cycle. The Asian Development Bank (ADB) estimates that Myanmar's annual inflation rate for 2025 and 2026 will be around 25%, far higher than the average of about 2% to 3% for the 11 ASEAN countries. The United Nations World Food Program (WFP) pointed out that since the U.S. and Israel launched joint airstrikes on Iran in late February, the average price of basic food items in Myanmar has risen by 19% as of mid-April. Myanmar relies almost entirely on imports for gasoline, making it particularly vulnerable when Middle Eastern crude oil exports to Asia decrease. Official fuel prices have soared to two or three times their original levels, severely impacting commercial vehicle transport. Makro Myanmar, a large supermarket chain under the Thai conglomerate Charoen Pokphand, has reported product shortages and delivery delays lasting several days. An office worker at a foreign financial firm said, "I ordered 10 items, and in the end, I only received 4 or 5." Around mid-April, during Myanmar's New Year holiday, many shops were even forced to close or reduce the use of freezers. With the gasoline shortage, customer traffic and logistics distribution have become unpredictable, and merchants are struggling to find fuel for generators. Amidst increasing economic pressure, Myanmar is undergoing a change in regime. Min Aung Hlaing, who has held supreme power over the military since the 2021 military rule, became president following a parliamentary election on April 3, and the new government was sworn in on April 10. Facing difficulties, large retailers are reducing costs by increasing remote work, cutting back on shuttle services, and stockpiling materials such as fuel and plastic bags. Recently, there have been reports that the pressure of soaring procurement costs has eased slightly.