Saudi Arabia’s decision to slash crude oil exports to Asia for a second consecutive month in April 2026, driven by the continued closure of the Strait of Hormuz, has compounded fuel supply pressure across Southeast Asia. Governments from Thailand to Malaysia are adjusting subsidy regimes, reserve mandates, and export policies in response to a supply shock that regional economists describe as the most severe oil disruption in modern history.
Key Facts At A Glance
- Saudi Aramco reduced crude exports to Asia from approximately 7.1 million barrels per day (bpd) in February 2026 to 4.355 million bpd in March, a contraction of approximately 38.6%, according to Kpler vessel-tracking data cited by Reuters.
- Saudi Arabia is rerouting available supply exclusively through the Red Sea port of Yanbu, bypassing the Strait of Hormuz; Yanbu’s capacity is substantially smaller than the Kingdom’s Gulf terminals.
- Only Arab Light crude loaded at Yanbu is being offered to Asian term buyers in April, representing a narrowing of the crude grade slate that many Asian refineries are not optimized to process.
- The Philippines, Thailand, Malaysia, and Brunei are among the most exposed economies, relying on imports for 60–95% of their crude supply, according to the Economic Research Institute for ASEAN and East Asia (ERIA).
- Thailand’s diesel price reached a record high of 50.54 baht per litre on April 5, 2026, following eight upward price adjustments since the conflict began on February 28.
- Thailand’s Oil Fuel Fund has accumulated a deficit exceeding 50 billion baht as of early April, after spending approximately 20 billion baht over the first three weeks of the crisis on subsidies.
- Thailand mandated oil traders to increase domestic fuel reserves from 1% to 1.5% of annual trade volume effective March 31, 2026, with a further increase to 3% required by April 30, 2026.
- Laos, Cambodia, and Myanmar lack meaningful domestic refining capacity and depend on product exports from Thailand, Vietnam, and Singapore.
The Second Month Of Cuts
The effective closure of the Strait of Hormuz, following the February 28, 2026 US-Israel military operation against Iran, triggered what the International Energy Agency has described as the largest supply disruption in global oil market history. Saudi Arabia, the world’s largest crude exporter, moved quickly to redirect as much supply as possible through the East-West Pipeline to the Yanbu export terminal on the Red Sea. However, Yanbu’s throughput capacity is a fraction of Saudi Arabia’s Gulf terminal capacity, and even record-high loadings from the port cannot offset the volumes previously exported through Hormuz.
In March, Saudi Aramco exported approximately 4.355 million bpd total, compared to 7.108 million bpd in February, according to Kpler data cited by Reuters. For April, Aramco notified term buyers in Asia that they would receive only the Arab Light grade, loaded exclusively from Yanbu. China, as Saudi Arabia’s largest crude customer, is expected to receive approximately 40 million barrels in April, down from 48 million in February. India faces a corresponding reduction to approximately 23 million barrels, down from 25–28 million barrels in recent months. Southeast Asian economies, which hold smaller term volumes, face proportionally constrained supplies with less market leverage to secure alternative cargoes.
Thailand: From Price Caps To Fiscal Pressure
Thailand entered the crisis as one of the region’s most exposed importers, with an estimated 74% of its crude sourced from Gulf countries. The government of Prime Minister Anutin Charnvirakul initially responded on March 2 by capping diesel prices at 33 baht per litre, drawing on the state Oil Fuel Fund to bridge the gap between capped retail prices and elevated import costs. The subsidy rate escalated rapidly, reaching 27 baht per litre for diesel and 9.70 baht for petrol by mid-March, with the fund spending approximately 2.5 billion baht per day at its peak.
The pace of fund depletion proved unsustainable. Thailand subsequently removed the price cap and shifted to a reduced but still active subsidy regime. By April 5, 2026, diesel B7 prices had reached 50.54 baht per litre, following eight successive upward adjustments. The Oil Fuel Fund Management Committee resolved on April 5 to reduce compensation for diesel B7 by 2.61 baht per litre, from 20.71 baht to 18.10 baht, cutting the fund’s daily outlay by approximately 212 million baht to around 1.497 billion baht per day. The fund’s total accumulated debt has exceeded 50 billion baht.
Finance Minister Ekniti Nitithanprapas convened a four-hour meeting with representatives of Thailand’s six oil refineries on April 3 to discuss drawing excess refinery profits into the Oil Fuel Fund, following a precedent established by a June 2022 cabinet resolution. The six refineries involved are the three PTT Group refineries, IRPC, GC and Thaioil, the two Bangchak Group refineries, BCP and BSRC, and SPRC.
To bolster reserves, Thailand’s Energy Business Department ordered oil traders under the Fuel Trade Act to increase reserves of domestically produced fuel from 1% of annual trade volume to 1.5% by March 31, 2026, and to 3% by April 30, 2026. This is expected to extend Thailand’s legally required fuel reserve period from 25 days to 32 days. Thailand has simultaneously imposed a general export ban on petroleum products, with a carve-out for Cambodia and Laos, reflecting regional energy interdependence and bilateral energy trade obligations.
Cascading Effects On Lower Mekong States
The export restriction has direct consequences for Cambodia, Laos, and Myanmar, none of which has meaningful domestic refining capacity. All three depend on product imports from Thailand, Vietnam, and Singapore to meet domestic fuel demand. Thailand’s continued export carve-out for Cambodia and Laos is driven in part by reciprocal energy arrangements: Thailand’s National Economic and Social Development Council (NESDC) noted that Thailand receives hydropower imports from Laos and natural gas imports from Myanmar, making a full export ban economically and diplomatically complex.
Cambodia has been forced to import additional fuel from Singapore and Malaysia to offset reduced supply flows following China’s state-owned company fuel export suspension and a parallel move by Vietnam. Laos saw more than 40% of its filling stations closed at the height of the shortage, with hour-long queues reported in Vientiane. Myanmar has imposed alternating driving days to reduce fuel demand.
Malaysia, Indonesia, And Broader Fiscal Exposure
Malaysia, both a crude producer and a net importer of refined products, has reduced the monthly subsidized petrol quota under the BUDI95 program from 300 litres to 200 litres per household, effective April 1, 2026. Prime Minister Anwar Ibrahim stated that existing fuel subsidies could be maintained for one to two months but acknowledged the fiscal burden of sustained elevated prices. Malaysia’s government secured maritime passage for Malaysian-flagged vessels through the Strait following diplomatic engagement with Iran.
Indonesia, despite being an oil producer, imports more than one-third of its crude, and has set aside 381.3 trillion rupiah in its 2026 budget for fuel subsidies based on an assumed crude oil price of approximately USD 70 per barrel. With Brent crude trading near USD 95–102 per barrel during the crisis period, the subsidy cost overrun has emerged as a serious fiscal risk. Indonesia’s Finance Ministry has signaled that if the budget cannot sustain existing subsidies, a partial pass-through of costs to consumers may be unavoidable.
Singapore and Malaysia’s Aster Chemicals and Energy and Indonesia’s PT Chandra Asri Pacific have declared force majeure on petrochemical contracts, signaling that supply constraints have moved beyond retail markets into industrial feedstock chains. Several refineries in Singapore and Malaysia have cut output due to constrained crude availability.
Regional Refinery Adaptation
Asian refiners are adapting procurement to a supply environment in which Arab Light from Yanbu is the only available Saudi grade. This narrowing of crude grade diversity presents technical challenges for refineries optimized around a broader crude slate, particularly those configured to process heavier grades that yield higher proportions of diesel and fuel oil. The shift to Arab Light, a lighter and lower-sulfur crude, may result in product slate mismatches that reduce domestic diesel and fuel oil output relative to what the same refinery volumes would previously have produced.
The Council on Foreign Relations reported on April 3 that Asia is expected to import a record volume of Russian fuel oil in March and April 2026, following a temporary US sanctions easing to reduce pressure on international oil markets, with Singapore and Malaysia among the top recipients. The Philippines and Indonesia have also signaled they are considering Russian fuel imports.