Middle East tensions threaten Myanmar’s fragile fuel supply

Myanmar’s fuel supply is under growing pressure as escalating conflict in the Middle East threatens global oil shipping routes, raising fears that shortages and rising prices could further strain the country’s already fragile energy system. Last week, the regime ordered millions of motorists to drive only on alternate days in an attempt to stretch dwindling fuel reserves. Under the directive, cars and motorcycles—except electric vehicles—are only allowed on the roads every other day based on their registration numbers. Authorities say the measure is intended to conserve fuel supplies as the country braces for potential shortages, though penalties for violations have not been clearly specified. Analysts say the deeper vulnerability lies in Myanmar’s heavy dependence on imported fuel and the country’s weakening ability to pay for it. Most of the gasoline and diesel used inside Myanmar is imported from regional trading hubs such as Singapore, Malaysia, and Indonesia. But analysts say Myanmar’s fuel shortages may be driven less by a lack of product in the region than by financial constraints. “The current scarcity likely reflects financial and foreign-exchange constraints rather than an outright lack of product in the region,” said Zameer Yusof, senior lead research analyst at global commodity tracking firm Kpler. Oil cargoes are typically priced in US dollars, creating significant challenges for Myanmar as the military regime struggles with chronic foreign currency shortages and restricted access to international banking. These conditions have sometimes forced buyers to use unconventional payment arrangements, including transactions in Chinese yuan or barter-style deals involving commodities such as timber, jade, or agricultural products, analysts say. Sanctions and political scrutiny since the 2021 military coup have also sharply reduced the number of suppliers willing to sell fuel to Myanmar. According to Kpler, Myanmar previously sourced refined fuel from a broad network of sellers across Asia, including companies in South Korea, India, Japan, and Taiwan. That supplier base has since narrowed significantly, with most shipments now coming from a small number of regional hubs. “Put simply, the pool of available and willing suppliers is at risk of shrinking further,” Yusof said. Source: Kpler The widening conflict in the Middle East threatens to tighten those supplies even further. Oil prices have climbed sharply since joint US–Israel strikes on Iran on February 28 and Tehran’s retaliation, which has effectively stopped tanker traffic through the Strait of Hormuz—a narrow waterway that normally handles roughly one-fifth of global oil shipments. The disruption has rattled energy markets and raised concerns about fuel supplies across Asia. Brent crude prices have already climbed toward $100 per barrel, increasing the cost of fuel imports across Asia. For Myanmar, where the kyat has sharply depreciated and foreign currency remains scarce, higher global prices could quickly translate into more severe shortages at home. Evidence also suggests that some fuel reaching Myanmar may originate indirectly from sanctioned Russian supplies. Kpler analysts say Karimun, Indonesia, has become an important staging hub since 2023 for Russian-origin refined petroleum products that are later redistributed to markets including Myanmar. Recent shipments along this route were carried by vessels including Harmony, Fly Marlin, and Marissa, according to Kpler data. China–Myanmar pipeline also exposed to Gulf disruptions Myanmar is also linked to Middle Eastern oil flows through the China–Myanmar crude oil pipeline, though the crude transported through the system is primarily destined for China rather than domestic use. According to Kpler data shared with Myanmar Now, nearly all crude shipments entering Myanmar by sea originate from Middle Eastern suppliers such as Saudi Arabia, Kuwait, and Qatar. These cargoes are unloaded at the Maday Island terminal in Rakhine State before being pumped through the pipeline to PetroChina’s refinery in Yunnan Province. “Most imported crude consists of Middle Eastern crude and is therefore at risk now due to disruptions around the Strait of Hormuz,” said Homayoun Falakshahi, lead research analyst at Kpler. Analysts say the pipeline was designed largely to shorten shipping routes for China by bypassing the Malacca Strait, not to shield supplies from disruptions in the Gulf. “If flows through the Strait of Hormuz were effectively choked off, it would prevent any Mideast Gulf oil from reaching the Asia-Pacific in the first place,” said Muyu Xu, another Kpler analyst. For Myanmar’s public, however, the more immediate concern remains the supply of gasoline and diesel needed for daily life. With global markets tightening, regional exports becoming uncertain, and Myanmar’s financial constraints worsening, analysts warn that further escalation in the Middle East could quickly translate into higher prices, longer queues at petrol stations, and deeper economic pressure across the country.

Middle East tensions threaten Myanmar’s fragile fuel supply

As conflict in the Middle East pushes oil prices higher and threatens global shipping routes, Myanmar is facing a full-blown energy crisis

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