Trump Orders Strait of Hormuz Blockade, Pressuring Energy-Dependent Asian Economies

US President Donald Trump has ordered the US Navy to blockade the Strait of Hormuz. This action is expected to further worsen the economic crisis faced by energy-dependent Asian economies, including US allies in the region and China. Bloomberg Economics analysts, including Jennifer Welch, stated that for the global economy and markets, this development shifts focus back to downside risks, implying higher oil prices, a greater hit to economic growth, and rising inflation. US Central Command (CENTCOM) announced that the US military would implement a blockade on all maritime traffic entering and exiting Iranian ports starting April 13, 10 AM EDT (10 PM Taiwan time). Trump's announcement came hours after direct talks between the US and Iran in Pakistan failed to reach an agreement. Over 80% of the energy for Asian countries, including US allies Japan and South Korea, often needs to be transported through the Strait of Hormuz. Asian governments are struggling to arrange alternative oil and natural gas supplies, reduce energy consumption by measures such as setting air conditioning to higher temperatures, and introduce policies to mitigate the impact on consumers and businesses. Oil tankers linked to Iran, as well as vessels from other countries including China, have historically navigated the Strait of Hormuz, and these shipments will be targeted by the blockade. Beijing may pressure Washington to lift the blockade on the Strait of Hormuz before Trump's anticipated visit to China in mid-May. Bloomberg Economics analysts noted that China might, depending on the situation, use its dominant position in critical minerals as leverage. The problem is not limited to energy. Deborah Elms, trade policy director at the Hinrich Foundation in Singapore, stated that downstream industries, from fertilizers and packaging to even fabric supplies, will be impacted by this blockade. She indicated that this disruption is not a short-term issue but potentially a long-term one, and unfortunately, especially for Asia, there are not many alternatives. In another report, Bloomberg presented three scenario analyses for war and the global economy. In the basic scenario, conflict continues at a lower intensity, with international oil prices projected to average $105 per barrel in Q2 and fall to $85 in Q4. In this scenario, global GDP is estimated to grow by 2.9% this year, with Q4 inflation at 4.2%. If the conflict escalates and the Strait of Hormuz is closed for several months, oil prices could surge to $170. In this scenario, global economic growth is expected to slow to 2.2%, and inflation could climb to 5.4% by year-end. If a long-term ceasefire is reached or the Iranian regime collapses, the Strait of Hormuz might reopen faster, and oil prices would return to pre-US-Iran conflict levels, with global growth estimated at 3.1% and inflation falling to 3.7%. Analysts stated that the latest developments still do not clearly indicate the most likely scenario. They will continue to observe the evolving situation, but for now, their basic scenario broadly aligns with the overall trend, although details are still changing.