The Iran shock and Asia

As net energy importers, most economies in Asia are worse off and facing higher inflation as a result of the attacks on Iran. But oil prices would have to rise much further than they have so far – to US$90~100 per barrel – to change the path of monetary policy in the region or to test the resilience of more vulnerable external positions. China is seeing another geopolitical ally being destabilised by the US. But the leadership’s more immediate concern will be that Iran’s response has stopped fuel flowing through the Strait of Hormuz, the source of half of China’s oil imports.