Washington, United States. Governments from Asia to Europe are rolling out measures to shield consumers from surging fuel and food costs triggered by the US-Israeli war on Iran. Steps include fuel subsidies, price caps and emergency commodity releases.
Major disruption to Middle East supplies
The conflict has halted a fifth of the world’s oil and liquefied natural gas supply from the Middle East and forced Saudi Arabia, the United Arab Emirates, Kuwait, Iraq and Qatar to cut output, in what the International Energy Agency called the largest disruption to energy supplies the world has ever endured.
Brent crude settled on Friday at $102.90 a barrel, up 42 per cent since the outset of US-Israeli strikes on Iran at the end of February. The IEA is coordinating the largest-ever release of oil from emergency stockpiles, and the United States has eased sanctions on Russian oil exports as a temporary measure to address the supply shortage.
Importers face shortages and shipping disruption
Countries heavily dependent on energy imports are facing soaring prices and fuel shortages due to disrupted shipping from the Strait of Hormuz, where several vessels have been attacked as Iran uses its position at the narrow strait to blunt US military power.
Governments are taking steps to cushion businesses and households as transportation and power bills rise, including subsidies aimed at preventing higher fuel costs from spreading through the economy to food prices and supply chains.
“A central question is how long importers can sustain fuel supply before shortages deepen,” said Natasha Kaneva, head of global commodities research at J.P. Morgan, in a Friday research note.
South Korea considers vouchers and power contingency plans
South Korean officials said they are considering additional energy vouchers to subsidise vulnerable households if rising fuel prices increase electricity bills. The government is also preparing contingency plans to boost nuclear and coal-fired power generation if LNG supplies from the Middle East remain disrupted.
Egypt caps bread prices amid inflation concerns
Governments are also moving to prevent higher energy costs from feeding into food inflation. In Egypt, authorities capped prices for unsubsidised bread sold in private bakeries as rising fuel and transport costs threaten to push up food prices.
How are rising fuel and food costs affecting your household budget?
