The Strait of Hormuz remains disrupted, but energy supplies in Asian frontier economies have yet to falter

Overview

This report examines whether oil and gas supplies to Bangladesh, Pakistan, Sri Lanka, and Vietnam can be sustained amid continued disruption in the Strait of Hormuz. It concludes that physical energy flows are broadly resilient for now, but this resilience depends on supply diversification, alternative routes, and possible advance stockpiling, at the cost of higher import expenses and heavier sectoral financial burdens.

Core views

The report first notes that the current outcome is significantly better than previously pessimistic expectations. Had analysts known in March that the Strait of Hormuz would remain under some form of closure through the end of August, markets might have anticipated persistent disruption to Middle Eastern supplies, oil prices rising well above US$100/barrel, and a drag on the global economy. However, at the time of writing, Brent crude oil was at US$93.3/barrel and the global economy remained operational. For Asian frontier economies that are highly dependent on Gulf Cooperation Council oil, the key issue is not only paying higher prices, but whether oil and gas can physically arrive. To assess physical flows, J.P. Morgan examined daily tanker imports, excluding Laos and Mongolia because they are landlocked. Comparing 2026 data with 2023–2025 averages, the report finds that imports in Pakistan, Sri Lanka, and Vietnam not only avoided a significant breakdown but were above recent historical averages; Bangladesh was broadly in line with its historical average. The report believes this may reflect companies or governments stockpiling in advance and front-loading demand as supply uncertainty increased, but it also indicates that energy transportation chains have not been completely interrupted by the disruption to the strait. The report attributes the resilience of tanker imports to two mechanisms: diversification of import sources and the continued flow of Gulf oil and gas through alternative routes and even through the Strait of Hormuz. According to information cited in the report, Bangladesh has sought supplies from a wider range of regions, including Central Asia, South Asia, Sub-Saharan Africa, and the United States; Pakistan is seeking to increase US supplies; Sri Lanka obtained some supplies from India in March–April and has reportedly discussed imports with China and Russia. Vietnamese customs data also show a sharp increase in the value of refined petroleum imports from Australia, China, and South Korea, which the report believes may reflect both higher prices and increased import volumes. Regarding liquefied natural gas, the report analyzes Bangladesh and Pakistan separately because natural gas accounts for nearly two-thirds and slightly more than one-quarter of their respective power generation mixes. Bangladesh's liquefied natural gas imports have broadly followed historical trends, possibly benefiting from increased imports from Australia, Indonesia, and the United States. Nevertheless, there have still been multiple reports of local shortages and power outages. The report therefore concludes that the outages may not be caused entirely by insufficient physical supplies, with the electricity sector's longstanding financial difficulties and rising generation costs potentially representing more important constraints. Pakistan's situation is more vulnerable, with its liquefied natural gas imports significantly below historical norms. The report believes this may be related to the expiration of an exemption arrangement that had previously allowed Qatari liquefied natural gas to be shipped to Pakistan. The expansion of solar power generation may have cushioned the impact of liquefied natural gas shortages on electricity production, but higher generation costs are still exacerbating financial weaknesses in the gas sector. According to IMF data cited in the report, circular debt in Pakistan's gas sector rose from PKR3.442 trillion at the beginning of 2026 to PKR3.611 trillion in June, equivalent to 2.7% of GDP; generation costs reportedly increased by 38%. Over the same period, circular debt in the electricity sector declined from PKR1.764 trillion to PKR1.675 trillion, showing that debt trends in the two energy subsectors were not aligned. The report ultimately emphasizes that supply resilience is not cost-free. Regional crude oil and refined petroleum import bills have already increased substantially, weighing on trade balances and external financial positions; disruptions to Gulf Cooperation Council oil and gas flows also appear to have intensified recently. Official data may also omit tankers operating with their transponders switched off, so observed shipping volumes do not fully equal actual flows. The report's interim conclusion is that most of the region can currently maintain transportation and electricity supply, but this situation will continue to be tested by supply disruptions, rising costs, and financial pressures in the energy sector. The data calendar section also notes that there were no data releases during the week of August 24–28 and no data review for the preceding week.

Analysis framework

The report first uses the continued disruption of the strait, Brent crude oil prices, and global economic performance to frame the gap between expectations and reality. It then uses daily tanker imports and a 28-day moving average to compare 2026 shipping activity with the 2023–2025 average. It subsequently tracks changes in supply sources by country, separately analyzes Bangladesh and Pakistan due to their higher reliance on natural gas for power generation, and finally links physical supply conditions with import bills, generation costs, circular debt, and external balances.

Methodology notes

• Industry/Sector Analysis FrameworkSupply-demand framework

  Analysis of physical oil and gas supplies and demand front-loading

  The report uses tanker and liquefied natural gas import volumes to determine whether energy is physically flowing into the countries and explains why imports remained resilient despite disruption to the strait through advance stockpiling, supply diversification, and changes in transportation routes.

• Event Dynamics and Behavioral FinanceEvent-driven analysis

  Event impact analysis of disruption to the Strait of Hormuz

  The report treats the continued disruption to the strait as a shock event, compares previously plausible pessimistic expectations for oil prices and the economy with actual outcomes at the end of August, and tracks its transmission to oil and gas transportation, import costs, and the financial condition of the energy sector.

• (Method Outside the Vocabulary)

  Comparison of a 28-day moving average with historical averages

  The report uses a 28-day moving average of tanker imports to smooth daily fluctuations and compares 2026 data with 2023–2025 averages to identify whether imports have deviated from recent norms.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Bangladesh

  Tanker and liquefied natural gas imports are broadly in line with historical trends, and energy supplies remain generally stable.

  Strengths

  Supply sources have expanded to regions including Central Asia, South Asia, Sub-Saharan Africa, the United States, Australia, and Indonesia.

  Weaknesses

  Shortages and power outages persist, while the electricity sector's longstanding financial difficulties and rising generation costs may constrain power supply capacity.

  Comparison

  Tanker imports are broadly at their historical average, weaker than the above-average performance of Pakistan, Sri Lanka, and Vietnam.

  Risks

  Rising import costs and financial difficulties in the electricity sector may continue to affect power supply and the external balance.

• Pakistan

  Tanker imports are above their recent historical average, but liquefied natural gas imports are significantly below normal.

  Strengths

  It is seeking more US supplies, while the expansion of solar power generation may cushion the impact of liquefied natural gas shortages on electricity generation.

  Weaknesses

  Circular debt in the gas sector rose to PKR3.611 trillion, while generation costs reportedly increased by 38%.

  Comparison

  Tanker imports are relatively resilient, but its liquefied natural gas shortage is particularly pronounced among the countries covered in the report.

  Risks

  Changes to liquefied natural gas transportation arrangements, higher generation costs, and rising gas-sector debt may weaken the resilience of the energy system.

• Sri Lanka

  2026 tanker imports are above their 2023–2025 average.

  Strengths

  It obtained some supplies from India in March–April and reportedly discussed imports with China and Russia, indicating that supply sources are diversifying.

  Weaknesses

  Supply resilience is still accompanied by a higher regional energy import bill.

  Comparison

  Like Pakistan and Vietnam, tanker imports are above their recent historical average; better than Bangladesh, which is only broadly in line.

  Risks

  Continued disruption to Gulf oil and gas flows and rising import costs may test existing supply resilience.

• Vietnam

  2026 tanker imports are above their 2023–2025 average.

  Strengths

  The value of refined petroleum imports from Australia, China, and South Korea has increased sharply, indicating that alternative supply sources are playing a role.

  Weaknesses

  The rise in import value may reflect both price and volume effects, implying increased pressure from import costs.

  Comparison

  Along with Pakistan and Sri Lanka, it is among the economies whose tanker imports are above historical averages.

  Risks

  Persistent Gulf supply disruptions and rising import bills may pressure the trade balance and external financial position.

Key data

• Brent crude oil priceUS$93.3/barrelPrice at the time of writing, below the triple-digit level widely expected under a scenario of sustained Middle Eastern supply disruption
• 2026 tanker importsPakistan, Sri Lanka, and Vietnam above their 2023–2025 averages; Bangladesh broadly in lineBased on a historical comparison of daily tanker imports and the 28-day moving average
• Share of natural gas in power generationNearly two-thirds in Bangladesh; slightly more than one-quarter in PakistanIllustrates the importance of liquefied natural gas supplies to the two countries' power systems
• Pakistan's liquefied natural gas importsSignificantly below historical normsThe report believes this may be related to the expiration of an exemption arrangement for Qatari liquefied natural gas shipments
• Circular debt in Pakistan's gas sectorPKR3.611 trillionIn June 2026, equivalent to 2.7% of GDP; PKR3.442 trillion at the beginning of 2026
• Pakistan's power generation costsUp 38%Increase cited in the report
• Circular debt in Pakistan's electricity sectorPKR1.675 trillionIn June 2026, below PKR1.764 trillion at the beginning of 2026

Impact & implications

The report believes that diversification of supply sources, alternative transportation routes, and the expansion of solar power have temporarily enabled regional economies to avoid a complete disruption of physical energy supplies, but the cost shock is translating into higher import bills, weaker trade balances, and financial pressure on the energy sector. Bangladesh's power outages may be driven more by sectoral financial constraints, while Pakistan simultaneously faces insufficient liquefied natural gas imports and rising circular debt in the gas sector.

Risks

• The prolonged disruption to Gulf Cooperation Council oil and gas flows appears to have intensified recently, and existing supply resilience may still be tested.
• Regional energy import bills have risen sharply and may continue to weigh on trade balances and external financial positions.
• Rising generation costs and financial difficulties in the energy sector may cause shortages or power outages even when physical supplies remain available.

What to watch

• Track whether tanker imports in Bangladesh, Pakistan, Sri Lanka, and Vietnam remain resilient relative to their 2023–2025 averages.
• Monitor liquefied natural gas imports in Bangladesh and Pakistan, as well as the cushioning effects of alternative supply sources and solar power generation.
• Monitor regional import bills, Pakistan's generation costs, and subsequent changes in circular debt in the gas and electricity sectors.