The Strait of Hormuz has been closed since late February 2026. US-Israeli attacks caused Iran to block the narrow passage that usually carries about one-fifth of the world’s sea oil. East Asia is most affected. The fastest route from the Gulf goes right through it.
Oil market researcher Rory Johnston explained the situation clearly in a March 29 tweet. He called the supply loss an “air pocket” moving through the usual flow of oil from the Gulf. A map from JPMorgan he shared showed the timeline: East Africa felt it last week, East Asia this week, Europe next week, and North America two weeks later. The Philippines, which relies heavily on Middle Eastern crude sent through Asian refineries, is in the first group affected.
An update from the Department of Energy, reviewed by Philreport.com, showed that commercial fuel stocks were enough for about 40 to 45 days as of mid-March. On March 27, President Marcos said crude reserves would last until June 30. A shipment of over 700,000 barrels from Russia had just arrived at Petron’s Bataan refinery. However, daily fuel use is between 450,000 and 487,000 barrels. This Russian shipment added less than two extra days of supply. The shortage is now becoming clear.
This is not the first time a distant chokepoint has shown how fragile Philippine energy security is. The country depends heavily on imported crude oil — 98 percent comes from the Middle East — and refined products from Asian refineries using Gulf oil. This has been the case for many years. The current disruption just removed the usual shipping delays. A PIA briefing in early March explained clearly: even without buying directly from Iran, the regional refining stops when tankers cannot leave the Gulf. This causes prices to rise first, then shortages.
Pump prices caused the first shock. Weekly price jumps over 10% became normal through March. Diesel passed P100 per liter in Metro Manila by mid-month and moved toward P114 or more in stages. Gasoline went over P70 and reached the 90s in some places. Jeepney and tricycle drivers earned less daily because fares did not keep up with diesel costs. Truck drivers added the higher costs to vegetable and rice deliveries from farms to cities. Power plants using fuel oil faced the same problem. This chain reaction, predicted by development economists for years, is happening now: higher transport costs go straight into the consumer price index, where transport and food have big impacts.
The national energy emergency declared by Executive Order 110 on March 25 allows the government to buy fuel, work with private companies, and enforce energy-saving rules. Talks with Russia are ongoing; a second purchase of 2.48 million barrels from Petron is confirmed. Discussions about waivers for more sanctioned barrels and direct deals with other suppliers are still happening. The emergency powers last for one year. The reliance on one shipping route does not.
GDP forecasts have been lowered. S&P Global raised its 2026 forecast slightly to 5.8 percent, expecting investment to recover, but warned that oil prices are a key risk. ING cut its forecast to 4.5 percent, saying higher import costs from $80-85 per barrel oil reduce growth by 0.8 percentage points. Capital Economics lowered its forecast to 3.8 percent. BSP lowered its growth forecast to 4.4 percent and raised inflation to 5.1 percent. These changes reflect how high energy costs reduce consumption, increase production costs in transport-heavy industries, and limit government spending to support the economy.
The buffer stock available in June exists only on paper and in storage tanks. Its usefulness depends on how long the strait remains blocked. If ships can quickly reroute around the Cape or if land routes from Russia and Central Asia increase, the problem may be short-lived. But if the blockade continues or shipping costs stay high, the 40-45 day supply will run out sooner than expected. A budget officer in a local government now must decide by Tuesday whether to release fuel for ambulances and garbage trucks or wait for the next national budget, which may also be tight due to high costs.
The Philippine economy has faced external price shocks before. This time is different because government spending for 2025 is low, consumer confidence is weak, and the peso dropped past P60 against the dollar in late March. Higher oil prices make these problems worse. The emergency declaration and Russian cargoes give some relief. But they do not change the fact that closing a faraway waterway can raise the price of diesel for a jeepney in Manila in just weeks.
The technology for diversification—more local renewable energy, strategic reserves lasting months not weeks, and varied crude contracts—has been available for years. What has been missing is steady political and financial support to build these before the next crisis. This situation shows again that the problem is not the technology. The problem is the lack of commitment to see energy security as a necessary investment, not just a temporary fix.