Last week, a Thai cargo ship ran aground near Iran’s Qeshm Island, two weeks after Iranian forces bombed the vessel as it tried to cross the Strait of Hormuz. Twenty sailors were rescued on the day of the attack as the Mayuree Naree drifted through an active war zone with a damaged engine, but three people remain unaccounted for.

The sailors were among many Southeast Asians caught up—in this case, literally—in the current Middle East conflict as it threatens to destabilize fuel supplies and derail economies. Around 20 percent of the world’s oil and natural gas transits the Strait of Hormuz. Iran has declared that no ships can transit the strait without its approval, aiming to jolt the global economy in retaliation for ongoing U.S. and Israeli attacks.

The squeeze on energy supplies has acutely affected Southeast Asia—but it is particularly felt in Myanmar, where the military overthrew the elected civilian government in 2021 and plunged the country into a yearslong crisis. The coup sparked an armed rebellion and economic collapse, but the military regime has in recent months seemed to be on a path to stabilizing the situation, with support from China. The fuel shortage now threatens that equilibrium, raising the prospect of further economic upheaval and unrest.

In Yangon, Myanmar’s commercial capital, sources said that the price of a taxi had nearly doubled since Feb. 28, when the Iran war began. The military regime said in mid-March that it only had 40 days of fuel reserves remaining, and it has implemented a rule to limit traffic, where vehicles with license plates ending in odd numbers can only drive on odd-numbered dates and vice versa for even numbers.

Guillaume de Langre, a former advisor to the energy ministry under Myanmar’s elected civilian government, said that the country is especially vulnerable because it depends on imports for oil, gas, and fertilizer; has limited foreign exchange reserves to buy these products; and faces broad Western sanctions that add transaction costs.

Even in neighboring Thailand, which imports crude oil but refines it locally, the shortage has had swift consequences. Many gas stations in Chiang Mai, the country’s second-largest city, are closed or out of certain types of fuel, leading to long lines. There are already knock-on effects: In Phrao district, around 90 minutes away, a store owner called Beam said this month that she had sold out of urea fertilizer, which is produced with natural gas and is mostly imported.

“I can ship 10 sacks from Chiang Mai at a time and then it all sells out immediately,” Beam said. She added that essential crops, such as rice, have already been planted for this harvest cycle—but the fertilizer shortage could cause major problems if a new source isn’t found before the next planting period in May. (Beam requested the use of a nickname to speak freely.)

Likewise, the fertilizer shortage could have “catastrophic consequences for food security” in Myanmar, de Langre said.

In general, Myanmar will face compounded logistical challenges from global shortages due to its own internal conflict. In the coup’s aftermath, newly formed pro-democracy militias teamed up with long-standing ethnic armed groups fighting for political autonomy, pushing the military to the brink of defeat—until China intervened to prop up the regime in 2024.

With the armed uprising now on the back foot, the military regime and its backers in Beijing hoped for a new period of stability. Last December, Myanmar held choreographed elections in which the National League for Democracy, which led the elected civilian government, was barred from competing. The military’s proxy party won easily with the commander in chief of the armed forces, Min Aung Hlaing, widely expected to ascend to the presidency.

A fresh economic crisis could undermine the still-fragile regime’s ability to project an image of normalcy. The junta will no doubt remember that the 2007-2008 mass protests known as the Saffron Revolution, which took place under the previous military government, were sparked in part by surging fuel prices.

Five years of conflict in Myanmar have led to an economic collapse with skyrocketing commodity prices, significant currency devaluation, and surging unemployment. With fuel—both oil and liquefied natural gas—becoming more expensive and most goods shipped within the country via truck, prices for essentials from food to household items will continue to rise.

Richard Horsey, the senior Myanmar advisor at the International Crisis Group, said the military regime will be “very worried about unrest” and will therefore do its best to keep prices down, but it has “almost no room to maneuver.”

Myanmar’s military government is under widespread Western sanctions due to the killing of unarmed protesters and civilians living in rebel territory that rights groups say amount to crimes against humanity, including airstrikes on . The sanctions have led to a shortage of U.S. dollars, which are needed to buy fuel on international markets, and difficulty doing business with other countries.

Though Myanmar produces some crude oil and plenty of natural gas, it doesn’t have any domestic refining capacity, leaving it dependent on other countries and pushing it further down an already squeezed production line. Furthermore, natural gas exports have long served as Myanmar’s primary source of coveted foreign exchange—as well as something to offer other countries for infrastructure development, often to extract those very resources.

“The paradox is that Myanmar is exporting its own gas via pipeline to Thailand and China, and it is importing gas at a steep markup for its own use,” de Langre said. “So, one of the most energy-rich countries in Asia in terms of resources is one of the most energy-poor, import-dependent ones, as well.”

De Langre explained that Myanmar  jet fuel directly from Iran, petroleum products from China and Singapore, crude oil from Qatar, liquefied natural gas from Malaysia, and fertilizer from China, Oman, and Thailand.

China declared a blanket fuel export ban in March in response to the Iran war, but Thailand carved out an exception for Myanmar and Laos in its similar export restrictions. Some Singaporean petrochemical companies, meanwhile, have already declared force majeure, essentially asserting that they aren’t legally responsible for failing to fulfill contracts due to circumstances beyond their control.

“Myanmar’s suppliers in the Gulf are out of the market because ships can’t leave,” while “other suppliers have to worry about their domestic needs and are able to export at high prices to countries where the transaction won’t be threatened by sanctions,” de Langre said. “If this situation lasts more than a few weeks … the solution might come from political arrangements with allies eager to have a stronger grip on the military regime.”

China and Thailand have played a pivotal role in normalizing Myanmar’s ruling junta, which other countries in the region initially isolated. Both have major infrastructure interests in Myanmar that the conflict has disrupted and that they expect to proceed if the situation in the borderlands stabilizes.

These include Thai investments in offshore gas fields and Chinese efforts to build a deep-sea port in the western state of Rakhine, which would connect to an oil pipeline that runs to southwestern China.

Horsey said the fuel shortage is a “big blow” for Min Aung Hlaing after a string of political victories. “The coming weeks were meant to showcase a new administration in firm control and a personal political success,” he said. “Instead, [the regime] now faces a series of economic shocks that will lay bare the failures of the past five years.”

Sources in rural Myanmar said that commodity prices are surging again due to the increased costs of fuel and transit, and in some remote areas, people can’t buy fuel at all. Joy, an X-ray technician at a rebel hospital in Karen state, which borders Thailand, said that the cost of medicine and medical equipment have increased due to higher transportation costs, at a time when the military has increased airstrikes.

“Patients are arriving every day because there are bombings every day,” said Joy, who asked to be identified by a nickname due to the risk of regime reprisals. “We are trying to manage as best we can.”

Still, Horsey pointed out that the military retains a degree of insulation from markets, making the fuel crisis more of a political liability than a battlefield one. “In practice, most of the pain will be pushed onto the population,” he said. “The military will ensure it retains priority access to fuel and food, as it always has.”

On the other hand, one potential silver lining for pro-democracy forces would be a long-term disruption to jet fuel supply. “The key to the junta’s ability to stay in power has been constant airstrikes on resistance and civilian settlements,” de Langre said. “A sustained jet fuel shortage would likely benefit resistance groups and civilians.”