Key takeaways
- Conflict in the Middle East triggered one of the largest oil supply shocks on record, with companies now expecting higher-for-longer energy prices.
- Global oil demand tumbled as much as 4.3 million barrels a day per day (mbd) in April, rising to 5.5 mbd in May.
- When stability returns, governments are expected to rebuild strategic reserves, keeping a floor under prices.
How oil supply disruption is hitting Asia Pacific companies
Crude oil markets have weathered one of the most severe supply shocks on record. But with the Strait of Hormuz back in focus, the supply outlook remains deeply uncertain.
- Companies across Asia Pacific are grappling with three core pressures:
- Cash flow disruption
- Counterparty credit risk
- Margin compression from rising input costs
- The impact is playing out differently across sectors:
- Airlines and refineries face the sharpest headwinds
- Industrials and transportation feel the impact through supply chains
- Oil and gas producing nations are relatively better positioned
Crude oil demand destruction in numbers
Infographic showing monthly crude oil demand destruction: 2.7 million barrels a day in March, 4.3 million barrels a day in April and 5.5 million barrels a day in May. Source: J.P. Morgan Research estimates.
"Crude oil, petrochemicals — these are inputs for manufacturers across Asia Pacific. These increased costs are leading to higher production costs for plastics, polymers, synthetic rubbers and packaging. And that's really cascading across industries," said Amalia Lazarus, Head of Subsidiary Banking for Asia Pacific.
Global oil demand slumped 4.3 million barrels a day (mbd) in April, climbing to 5.5 mbd in May, driving an inventory drawdown that will keep prices elevated for longer. When stability returns, governments will race to rebuild strategic reserves — putting a floor under prices well beyond what current market expectations imply.
"Headline fatigue is setting in. But don't mistake the price moves for stability. The real impact is being felt on the product side — gasoline, diesel, LPG, jet fuel. That's where the real stress is at the moment, the things that consumers use every day," said Raman Walia, Head of Commodities Sales for Asia Pacific.
What this means for companies in Asia Pacific?
For companies in Asia Pacific, the immediate priority for treasurers is liquidity visibility — knowing exactly what cash is available, where it sits and how quickly it can move. With cargoes being rerouted and lead times extending, cash flow forecasting has become significantly harder and the margin for error smaller.
Counterparty exposure — both banking relationships and end-customer risk — also warrants a hard look as the external environment continues to shift. Longer term, companies are increasingly turning to regional automated liquidity structures and AI-powered forecasting tools to build the kind of resilience that outlasts any single market shock.
"In the near term, we're helping clients with liquidity and funding solutions to manage cash flow volatility, and addressing their immediate FX needs as markets shift. Longer term, we're helping companies think through supply chain finance, advising on the best automation and AI tools and making sure their risk management policy is built for whatever comes next," added Lazarus.
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