Following the closure of the Strait of Hormuz on February 28, 2026, the world has experienced a profound interruption in oil supply chains, causing Brent crude prices to approach $120 a barrel. This critical passage, which ordinarily handles about one-fifth of global petroleum liquids, came to a standstill, prompting major powers to enact extraordinary state-led interventions.
In response to the unprecedented disruption in decades, the International Energy Agency (IEA) coordinated the largest release of emergency oil stocks in its history, totaling 426 million barrels—representing around one-third of its members’ reserves. The United States, who started the war, led these efforts by supplying 172.2 million barrels from the Strategic Petroleum Reserve through a special emergency exchange, requiring participating firms to return the oil plus an additional amount, thereby replenishing the reserve without relying on taxpayer funds.
Across Asia, governments with significant reliance on oil imports initiated substantial fiscal policies to shield their economies. Japan, which obtains most of its crude from the Middle East, reinstated a subsidy to keep gasoline prices capped at ¥170 per liter despite higher market costs at ¥190 . India responded by sharply reducing fuel excise duties to steady pump prices, shifting the burden to state-run oil companies and increasing the likelihood of the fiscal deficit rising to roughly 5%. China upheld controls on domestic refined product prices and introduced subsidies ahead of mandated price ceilings.
European countries have emphasized balancing immediate support for consumers with ongoing energy reforms. Spain launched a €5 billion stimulus, cutting the fuel VAT rate and delivering direct payments to critical sectors. Italy introduced a temporary excise tax reduction and appointed a regulator to monitor and address price manipulation. Meanwhile, Germany continued demand management strategies, prolonging a national public transport pass and restricting how often fuel stations can adjust prices each day.
In South America, Brazil set diesel taxes to zero and introduced new subsidies for producers and importers. Southeast Asian approaches varied, with Indonesia maintaining extensive energy subsidies while Malaysia began restricting subsidized fuel allocations as part of a broader fiscal tightening effort.
Australia enacted a three-month cut in fuel excise, aiming to lower costs for drivers by 26 cents per liter. Vietnam temporarily eliminated multiple fuel-related taxes. The Philippines approved emergency powers enabling the president to reduce or halt fuel excise taxes after declaring a national energy emergency.
South Korea combined expanded fuel tax reductions with the possibility of introducing mandatory driving restrictions if prices climb further, a measure not seen since the Gulf War.
Although these interventions offer short-term price relief, analysts point out that rapid depletion of fiscal resources is difficult to sustain. As a result, the 2026 supply crisis is pushing many nations to advance plans for domestic renewables and electric vehicles, elevating energy self-sufficiency as a cornerstone of national policy.
