Gas stations are cut off, people are panic buying, and flights are being cut! The global energy crisis is getting worse, and many countries have initiated emergency measures

# Zhang Yaqi

Source: Wallstreetcn

The energy crisis triggered by the Iran war is sweeping the globe, causing fuel shortages at gas stations, airline capacity cuts, and panic hoarding in many countries. Australia, India, Poland and others have urgently introduced tax cuts, export duties, and price controls. Wood Mackenzie warns that subsidy funds in countries such as Vietnam and Thailand are nearing exhaustion, and India faces a significant GDP impact.

The global energy shockwave from the Iran war is spreading at an unprecedented pace. From Asia-Pacific to Africa and Europe, fuel station shortages, public panic buying, and mass flight cancellations have emerged one after another. Governments across many countries have been forced to roll out intensive emergency intervention measures within days, launching a full-scale global battle between demand destruction and policy responses.

In the latest developments, Australian Prime Minister Anthony Albanese announced a three-month cut in fuel excise taxes by half to counter gasoline prices hitting a 20-year high. Indian Finance Minister Nirmala Sitharaman imposed heavy export taxes on diesel and aviation fuel while lowering domestic retail fuel duties. Major Vietnamese airlines announced sharp capacity reductions starting April. Poland plans to cut fuel taxes and set price caps, and the Czech government is considering regulating retail profit margins at gas stations.

Pressure in energy markets has directly spilled over to transportation. According to Bloomberg, European jet fuel prices have surged 114% since the war began, with Singapore fuel prices rising roughly 140%. UBS warns that jet fuel shortages across Asia are leading to more flight cancellations, with Vietnam Airlines and Air New Zealand both announcing cuts to some services. Data compiled earlier by Goldman Sachs showed Asia is the region hit hardest by demand destruction. JPMorgan’s commodity team analysis indicates the shockwave originated in Asia, spreading sequentially to Africa, Europe, and finally the United States.

Energy consultancy Wood Mackenzie warned that if Brent crude averages $100 per barrel over four months, the fiscal shock to India would equal 0.7% of its GDP. Vietnam’s dedicated subsidy fund will be exhausted as early as early April, Thailand’s equivalent fund is already in deficit, and some Asian governments may soon hit fiscal limits.

## Asia: Panic Buying Spreads, Widespread Fuel Station Shortages

Australia is one of the most closely watched economies in this crisis. Reports show one in every seven fuel retailers in New South Wales is facing shortages of at least one fuel type. An independent gas station in Cairns, Queensland, has run out of unleaded gasoline, with diesel prices up 85% from pre-war levels. Diesel in Sydney briefly hit 314.5 Australian cents per liter, an all-time high, with hundreds of stations nationwide reporting shortages of at least one fuel this week.

Peter Khoury, a spokesperson for the NRMA, stated shortages stem mainly from public hoarding rather than overall supply reductions: “People are stockpiling fuel in jerrycans and storing them in garages.” Freight companies are also instructing drivers to “top up diesel whenever seen, even with half a tank left.” Prime Minister Albanese’s tax cut plan is expected to reduce prices by around 26 Australian cents (roughly US$0.18) per liter. Treasurer Jim Chalmers estimated the total cost of the measures at around A$2.55 billion, lowering CPI by approximately 0.5 percentage points.

Vietnam faces an equally severe situation. Bloomberg reported Vietnam Airlines will suspend seven domestic routes from April 1, planning 10%–20% monthly flight cuts next quarter, with up to 26% of domestic flights and 18% of international flights canceled. Low-cost carrier VietJet Air plans an 18% overall capacity reduction in April, and Bamboo Airways will cut daily flights to 15–17. Vietnam imports over 80% of its crude oil from the Middle East, and the government has urgently frozen some fuel taxes through April 15.

## Escalating Government Intervention: Export Restrictions, Tax Adjustments, and Price Controls

Under intense supply chain disruptions, governments are rapidly expanding their policy toolkits.

India’s response is representative. Bloomberg reported Finance Minister Nirmala Sitharaman announced a 21.5 rupee (around 23 U.S. cents) per liter export duty on diesel and 29.5 rupees per liter on aviation fuel, while cutting domestic gasoline and diesel taxes by 10 rupees per liter each. Madhavi Arora, an economist at Emkay Global Financial Services, estimated the tax cuts alone will reduce annual government fiscal revenue by roughly 1.55 trillion rupees (about US$16.4 billion). Severe shortages of LPG and LNG have already triggered long queues at gas stations. Meanwhile, upcoming elections in several key states add further policy pressure on the Narendra Modi administration.

Japan is addressing the crisis through energy structure adjustments. Reuters reported the Ministry of Economy, Trade and Industry (METI) will temporarily lift the 50% capacity utilization cap on inefficient coal-fired power plants from April 1 for one year, expected to cut LNG consumption by about 500,000 tonnes annually. Japan imports roughly 4 million tonnes of LNG via the Strait of Hormuz each year, accounting for about 6% of total imports. Trade Minister Ryosei Akazawa stated strategic petroleum reserves will prioritize domestic refiners in principle. Although the Philippines and Vietnam have sought assistance, Japan currently has no plans to directly provide reserves to neighboring countries.

In Thailand, the Energy Ministry has ordered refineries to publish selling prices and inventory levels, banning sales above government-set prices. Diesel demand in Thailand has jumped from a pre-conflict average of 67 million liters per day to roughly 87 million liters, driven mainly by panic hoarding. Despite retail price hikes, diesel remains subsidized at 19 baht (around 58 U.S. cents) per liter, leaving the dedicated subsidy fund with a deficit of about 38 billion baht.

## Africa & Europe: Crisis Continues to Expand

The energy crisis spillover has reached Africa and Europe. In Kenya, Vivo Energy, part of Vitol Group, acknowledged temporary stockouts at some outlets, mainly in remote areas. Martin Chomba, Chairman of the Kenya Independent Petroleum Dealers Association, stated “rural gas stations are hit hardest — our access to competitively priced product has been cut off.” Around 68% of stations are non-franchised, with a “considerable number” no longer receiving regular supplies. Finance Minister John Mbadi announced the use of a petroleum development levy to stabilize prices but admitted the situation would escalate to a “state of emergency” if the war continues.

In Europe, Bloomberg reported Czech Prime Minister Andrej Babiš publicly criticized two domestic fuel distributors for charging “exorbitant” prices, naming Poland’s Orlen SA and Hungary’s Mol Nyrt to immediately cut prices, stating they “should not profit from the Iran crisis.” Finance Minister Alena Schillerová said the government is seriously considering regulating retail profit margins at gas stations. Both companies stated their prices are determined by market and international oil prices.

Polish Prime Minister Donald Tusk announced cuts to fuel VAT and excise duties, alongside daily retail price caps linked to wholesale prices, expected to reduce prices by 1.2 zloty (around US$0.32) per liter. The government also plans a windfall tax on refiners, directly impacting Polish energy giant Orlen SA — its shares fell as much as 6.7% following the news. EU Commission data shows Polish gasoline prices have risen 22% since the Iran war began, with diesel surging 40%, both significantly above the EU-27 averages (roughly 15% for gasoline, 26% for diesel).

## Approaching Fiscal Limits: Subsidies Burn Fast, Policy Space Shrinks Rapidly

Wood Mackenzie noted in a research note that Asian governments have launched unprecedented policy interventions, but the fiscal costs of sustaining these measures are staggering. Price controls and subsidies across the region are similar in nature, with governments supporting consumers through various mechanisms: Japan and Malaysia compensate refiners and fuel suppliers; India freezes retail prices, requiring state-owned oil companies to cover losses upfront, with the central government intervening via tax cuts once losses become unsustainable.

Among the most fiscally stressed countries: Vietnam’s subsidy fund is expected to be exhausted as early as early April; Thailand’s fund is already in deficit; Indonesia risks hitting its statutory 3% fiscal deficit cap. If oil prices remain high for an extended period, India’s fiscal shock would equal 0.7% of GDP and 7.2% of government revenue. Wood Mackenzie stated wider fiscal deficits across much of Asia are almost certain.

The consultancy warned that “if oil prices stay elevated, some Asian governments will soon reach fiscal tipping points.” Once existing subsidy buffers are depleted, sharper price adjustments or stricter demand-side controls will become unavoidable. While the current flurry of government policies helps stabilize livelihoods in the short term, a prolonged war would make the second phase of this global energy crisis far more difficult to resolve than the first.

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