SVA continues to monitor developments in the context of the joint US and Israeli military operation against Iran.

Below is a further assessment of the implications from an Asian perspective, following on from our assessment issued on 5 March 2026.

SVA will continue to issue updates as events move forward.

Diplomatic consequences

The Iran War has altered the diplomatic outlook ahead of meetings between US President Donald Trump and Chinese Communist Party (“CCP”) General Secretary Xi Jinping, planned for 31 March to 2 April 2026.

Current signs are that the diplomatic apparatus in the People’s Republic of China (“PRC”) wishes to proceed with the meeting, although the agenda now will clearly need to address Iran, in addition to issues such as Taiwan, tariffs, semiconductors, the Panama ports, the Ukraine war, and Venezuela.

What is striking, however, is that neither side has made much mention of Taiwan in recent weeks. Certainly, Washington has delayed delivery of a USD13 billion arms package, and Beijing has scaled down flights near the disputed island in an effort to create goodwill, but the stance of the US, in particular, is not clear.

Should President Trump feel on the back foot owing to the Iran conflict, he may choose to make concessions to Beijing on Taiwan. As such, Iran’s continuing the conflict could have ramifications for Taipei.

The Strait of Hormuz

Of most immediate concern to Asian states is that the Iran conflict has resulted in a steep decline in traffic through the Strait of Hormuz, leading to sharp rises in the prices of oil, liquified natural gas (“LNG”), and other commodities. Such price rises have varying impacts on Asian states, although all are vulnerable.

Attacks on shipping continued on 11 March despite a textbook military campaign against Iran. These attacks are likely to continue.

Perhaps the most exposed locations are Japan, South Korea and Taiwan, in part because they are major importers of energy products, and in part because their economies rely on energy-intensive manufacturing. Some 90% of Japanese oil imports and about a third of Taiwan’s LNG imports come from the Middle East, and Japan’s Prime Minister Takaichi on 11 March 2026 announced plans to release oil from its strategic reserve ahead of other states.

Southeast Asian states will face their challenges, too, with Singapore and Thailand notably exposed. Of concern is that many Southeast Asian government have in place fuel subsidies, meaning that pressure on government budgets will rise.

Length of closure

A major consideration for Asian states will be the duration of the disruption of supplies from the Persian Gulf.

Of note is that this disruption started in earnest after the cancellation of war risk insurance by the 12-strong International Group of Protection and Indemnity Clubs (which cover 90% of shipping), ahead of a planned price rise to be set out in new contracts, but also reportedly owing to solvency rules affecting reinsurers.

The US government announced that its Development Finance Corporation (“DFC”) would offer shipping insurance at a moderate price, although JP Morgan fears that the USD20 billion fund may be too small to facilitate levels of cover sufficient to restart shipping.

In addition, Washington announced that its forces would escort vessels through the Strait of Hormuz, perhaps in convoys, although as of the time of writing no such transit has yet taken place.

Much now depends on conditions in the Strait. SVA would note, though, that even were the conflict to end in short order, insurance will take time to come back into place, with disruption likely to follow for weeks to come.

Indeed, steps that would allow transit might include reinsurer recapitalisation, actuarial assessments, the re-underwriting of vessels and cargos, and the putting in place of amended arrangements for trade finance, and chartering. Also of importance will be persuading crews to transit contested waters.

In short, marine insurance has become a “chokepoint” in-and-of itself, meaning that disruption seems likely to last for some time, even in a best-case scenario.

In a worse-case (and perhaps likelier) scenario, disruption could last far longer. After all, it is possible that Iran will continue to target vessels in the Strait of Hormuz with drones or mines, even if the US and Israel cease attacks immediately.

As such, businesses in Asia should consider preparations for a potentially extended period of supply interruption.

Secondary consequences

Asian states will face a range of consequences of this disruption. The most obvious will be rises in the price of energy products, affecting transport and electricity generation (although most economies are less exposed than they were to the energy shocks of the 1970s). However, other commodities are also in consideration, such as:

• A rise in the price of fertilisers may drive up the price of food, as some 33% of urea, a precursor, transits the Strait of Hormuz. A “fertiliser shock” could hit states such as India and Australia.
• Methanol is another consideration, as QatarEnergy has halted production, and Iran was a major producer. Methanol is used in the production of biofuels, such as palm oil, major producers of which are Malaysia and Indonesia.
• The Gulf accounts for 47% of world exports of sulphur, which is crucial for Indonesia’s nickel industry (sulphuric acid is used to leaching the ore). Indonesia may have to slow production (it accounts for about 50% of world supply). Shortages may also affect China’s EV and lithium-ion battery industries.
• Styrene, propylene and PVC stocks have also been affected. These are common feedstocks for the chemicals and plastics industries, and China is a major importer.

Taiwan

The disruption in the Strait of Hormuz is also instructive in terms of how even a small order Taiwan crisis might play out.

Any form of blockade or military action in the Taiwan Strait could prove similarly dislocating for shipping in East Asia, although longer routes for vessels are more readily available.

China’s declaration of a quarantine of Taiwan (or just a single port) could result in a comparable cancellation of insurance, prompting a similar stoppage of trade to the island. Such action would prove especially damaging to the electronics or semi-conductor industries.

SVA continues to monitor developments, and will provide updates as matters progress.

SVA

SVA (www.stevevickersassociates.com) is a specialist risk mitigation, corporate intelligence and risk consulting company. The firm serves financial institutions, private equity funds, corporations, high net-worth individuals and insurance companies and underwriters around the world.

We can be of assistance to your organisation in dealing with these complicated issues. If you wish to protect your business from the negative consequences of geopolitical risks, please do not hesitate to contact us.