NewKerala.com

Oil Supply Disruption Threatens Asia's Economy: Morgan Stanley Warns

Morgan Stanley warns that sustained oil price rises and potential supply disruptions, particularly for LNG, could have severe knock-on effects across Asia. Economies like India, Thailand, Korea, and Taiwan are most exposed, with risks spreading to sectors like agriculture, auto manufacturing, and consumer industries. The report notes early signs of disruption, including India rationing LNG and countries curbing fuel exports. High-frequency trade data and industrial production figures for March will be key indicators to monitor the escalating impact.

Key Points: Oil Supply Disruption: Knock-On Effects in Asia | Morgan Stanley

  • Oil price rise to push Asia's burden above 10-year average
  • LNG supply disruption a major concern
  • Fertilizers, autos, and consumer industries at risk
  • India, Korea, Thailand curbing exports and adjusting policies
2 min read

Oil supply disruption to have knock-on effects across key sectors in Asia: Morgan Stanley

Morgan Stanley warns rising oil prices & supply disruptions could hit Asia's key sectors like agriculture, autos, and manufacturing. India, Korea most exposed.

"Non-linear effects could kick in related to production and exports across Asia - Morgan Stanley report"

New Delhi, March 15

The rise in global crude oil prices amid the West Asia conflict has the possibility to have knock-on effects on various other sectors in Asia, including India, according to a report by Morgan Stanley.

Morgan Stanley has put out a report highlighting the key sectors which could be hit by supply disruptions and potential knock-on effects.

"As the days of supply disruptions drag on, we could see more sectors getting affected: Non-linear effects could kick in related to production and exports across Asia," said the report.

The rise in oil prices, if sustained, will take Asia's oil burden from below to above its 10-year average.

But beyond the rise in oil prices, Morgan Stanley said it is more concerned about potential disruption risks to supply quantities getting curtailed in the case of LNG.

India, Thailand, Korea, and Taiwan, it said, are the economies which are most exposed on this front.

"We also highlight fertilisers, propane, select petchems like butadiene, helium, and sulphur materials/inputs whose supply could be hit, with knock-on effects on various industries - e.g., agriculture, manufacturing of semis and autos, and select consumer industries," it read.

On the energy front, there have been some signs of disruption.

For instance, Morgan Stanley cited India having announced rationing of LNG and hiked LPG prices. Korea will impose price caps, lower fuel taxes, and extend subsidies on diesel. Thailand has asked civil servants to work from home. The Philippines implemented a four-day work week for government officials.

"For most other economies, fuel prices have been adjusting upwards per their respective mechanisms. Refiners in select economies have still seen cuts in utilisation rates to conserve fuel reserves. India, China and Thailand are curbing exports of fuel products. We expect that there will be more areas of disruption to production and exports in the coming days and weeks if the geopolitical tensions drag on," it noted.

Signs of disruption across various industries and high-frequency data on trade, like Korea's 10-day exports trend, monthly PMI, industrial production and exports for the month of March, are key monitorables going ahead, according to Morgan Stanley.

- ANI

Share this article:

Reader Comments

P
Priya S
The mention of fertilizers is critical. Our farmers are already under stress. A disruption in supply or a price hike in inputs could spell disaster for the upcoming crop season and food security. Hope the authorities have a contingency plan.
R
Rohit P
LPG prices are already pinching the common man's pocket. If this continues, the kitchen budget for middle-class families will go for a toss. The four-day work week idea from the Philippines is interesting, but will it work here? 🤔
S
Sarah B
While the report highlights real risks, I feel it's a bit alarmist. India has navigated oil shocks before. Our refining capacity and diversified import sources provide a buffer. The focus should be on accelerating domestic exploration and renewables.
V
Vikram M
The auto and manufacturing sectors will feel the heat. Higher input costs mean either lower profits for companies or higher prices for consumers. This could slow down the economic recovery we were hoping for. A tough phase ahead.
K
Kavya N
It's a global issue, but as one of the most exposed economies, India needs proactive diplomacy to ensure energy flows. At home, maybe it's time to promote work-from-home models more aggressively, like Thailand, to reduce fuel consumption for commuting.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50