Cascading Consequences: Western War, Eastern Wounds

Thousands of miles away from the fighting and bombings in West Asia, there is another kind of shock wave passing through the three island nations along the Pacific Ring of Fire. From the bustling streets of Manila and the flashing lights in Tokyo to the wide open fields of New Zealand, there are three countries that are in deep trouble: the Philippines, Japan, and New Zealand. These nations may be very different in almost every way, but what they have in common is their dependence on one energy source, oil, which goes through the Strait of Hormuz. Now that the lifeline has been cut, the cost of survival has increased dramatically. The cost of diesel has doubled in just weeks in the Philippines. People are sleeping in their cars since they do not have enough money for either fuel or rent. In Tokyo, there are thousands of protesters shouting at their Prime Minister.

The economy of the Philippines has entered a critical energy and economic crisis as a result of the war. This is because the Philippines is highly dependent on oil from the Persian Gulf area, which comprises 98 per cent of their total oil needs. Since the start of the conflict on February 28, 2026, the price of diesel and gasoline has doubled, from 55 pesos to around 130 pesos per litre. As a result, President Ferdinand Marcos, Jr. declared a state of energy emergency on March 25, 2026. The nation only has enough reserves to last for 45 days, and it is doing everything possible to find another one million barrels of oil and use coal power plants. According to an Asian Development Bank (ADB) report, the Philippines will experience slow economic growth and very high inflation due to the current crisis. “These developments would arise from a complete dependency on oil imports, which are expected to increase transport and electricity prices, increase the cost of rice because of fertilizers and irrigation, and impact manufacturers and exporters,” says the report. For common Filipinos, the crisis poses an immediate danger to their survival. Drivers of jeepneys, which are one of the most common modes of transportation in the country, are having difficulties buying fuel, and some have already quit their jobs, while others cannot afford their rent payments. In the slums of Manila such as Baseco, people are cooking their meals by lighting a fire using any material they can find instead of paying for liquefied petroleum gas that has become expensive. Moreover, the war may also pose dangers to other important foundations of the Philippine economy. West Asia is one of the biggest destinations for overseas Filipino workers, and the ADB has said that an extended war in the region could endanger the livelihoods of several million Filipinos, including those who send money home after earning from their work abroad, which reached an all-time high of $35.63 billion in 2025.

Japan depends on West Asia oil imports to meet almost all its needs for crude oil, and hence it is highly exposed to any disruption in the Strait of Hormuz. The effects on Japan’s economy have become very apparent, with the current cost of Brent crude averaging 190.80 yen per litre, which is its highest recorded level. In response to the situation, Prime Minister Sanae Takaichi’s cabinet has put in place several emergency measures. These include releasing oil reserves, 80 million barrels of oil, which is its biggest-ever reserve release. This equals 45 days of domestic consumption of fuel by the country. The Japanese government has resumed its gasoline subsidy to limit its cost to consumers and has also started to use coal-fired thermal power stations for electricity supply.

According to Ayako Obashi, a professor at the Faculty of Economics, Keio University: “Since about 95 per cent of Japan’s crude oil imports come from the Middle East and most of that passes through the Strait of Hormuz, the full impact on oil imports, petroleum products, and the broader economy is likely to appear with a time lag. The energy shocks raise concern about a possible stagflation scenario, with slower growth and higher prices occurring at the same time.” The economic suffering has been exacerbated by the increasing discontent among the public regarding Takaichi’s domestic policy programme, which has resulted in mass protests in Tokyo. In late February, several thousand protesters rallied outside the National Diet Building waving placards with slogans like “No to War!”

It has become clear now that the underlying fragilities of the New Zealand economy, which were already there before the start of the crisis, have exacerbated the ongoing situation. The country was facing problems due to recession and stagnation, which emerged as the result of the pandemic, and the country was having trouble stabilising its financial state as inflation increased pressures on businesses and forced people to curb expenditure. While the first signs of recovery were seen in 2025 with projections for GDP growth at 0.4 per cent, according to HSBC, the ongoing war has stopped it in its tracks. As mentioned by Reserve Bank of New Zealand Chief Economist Paul Conway, the price levels in the country had already increased by around 26 per cent during the years of the pandemic, and the current energy crisis is adding to the existing troubles of households.

The effects of the ongoing economic turmoil are seen in all spheres of life. The price of diesel is growing faster than petrol, and since the economy of New Zealand primarily functions on diesel-powered trucks, delivering products such as milk and lettuce, everything that people consume has become expensive. “This is one of the most significant oil shocks we’ve had in history,” said Prime Minister Christopher Luxon.

Jaiee Ashtekar, an expert on international relations, stated: “The oil crisis is fundamentally a cost-of-living crisis for New Zealand because the nation lacks strategic fuel reserves and is at the end of very long supply lines. Every dollar increase in global crude prices translates almost immediately into higher petrol, diesel, and electricity costs, which accelerates inflation, and forces the central bank to keep interest rates high, and push the economy deeper into stagflation.”

There are only a few things the government can do. The finance minister of New Zealand, Nicola Willis, has already announced that there will be no widespread aid because of the dangers of creating an inflationary cycle, although the government has promised limited aid worth $50 weekly for about 143,000 families in the form of work and child benefits for as long as petrol remains above $3 per litre. However, other basic necessities may also be at risk, such as fertiliser. In fact, New Zealand imports almost 22 per cent of its total supply from West Asia.

Indeed, in all three countries, a common issue is emerging: importing fossil fuels and crude oil from a highly unstable West Asia. The Philippines and New Zealand have insufficient fossil fuels stockpiles, while in Japan, the majority of crude oil needs come via lengthy and fragile supply chains. As stated by Obashi, this is not just a domestic issue, but a regional catastrophe.