Cancellations took effect at midnight GMT on 5 March. The International Group of P&I Clubs, covering approximately 90% of the world’s ocean-going tonnage, had collectively withdrawn from a zone carrying roughly 20% of the world’s daily oil supply. Lloyd’s List clarified the mechanism: this was not wholesale cancellation of all cover, but specifically the war risk extensions charterers and cargo owners received as standard.

What replaced them was voyage-by-voyage reinstatement at materially higher premiums that most operators declined to absorb.

What the Repricing Looks Like in Practice

The cost movement is quantifiable. Before the strikes, war risk premiums stood at approximately 0.25% of a vessel’s insured hull and machinery value, according to Marsh, according to Marsh, cited by S&P Global Market Intelligence. Premiums have since reached 0.5% or higher – a doubling within days that passes directly to cargo owners as surcharges.

This was not wholesale cancellation of all cover, but specifically the war risk extensions charterers and cargo owners received as standard.

The named carriers moved within 48 hours. Hapag-Lloyd announced a War Risk Surcharge of US$1,500 per TEU, CMA CGM an Emergency Conflict Surcharge of US$2,000 per 20-foot dry container, and Maersk an emergency freight increase across all Gulf ports under Clause 20 of its bill of lading – the contractual provision permitting unilateral rate modification – per primary carrier advisories published 2 March.

Peter Sand, chief analyst at Xeneta, told Lloyd’s List the strikes would see “the further weaponisation of trade and shatter hopes of a large-scale return of container shipping to the Red Sea in 2026” – confirming both chokepoints are now simultaneously closed, a dual-corridor disruption with no modern precedent.

The ASEAN Treasury Risk That Is Not in the Oil Price

For ASEAN CFOs and treasury functions, the war risk repricing creates three direct exposures the Brent crude price does not capture: freight cost pass-through on open contracts; working capital pressure from 10–14 additional transit days via the Cape of Good Hope; and force majeure trigger risk from Maersk’s Clause 20 invocation.

For manufacturers with back-to-back supply and offtake contracts, the asymmetry is immediate: freight costs have increased unilaterally while customer pricing may carry no equivalent pass-through clause.

For manufacturers with back-to-back supply and offtake contracts, the asymmetry is immediate: freight costs have increased unilaterally while customer pricing may carry no equivalent pass-through clause. The insurance withdrawal is not a temporary disruption. The Joint War Committee of Lloyd’s Market Association updated its high-risk area listings in early 2026, a reinsurance pricing designation independent of daily military developments.

Treasury functions modelling freight normalisation on a six-week horizon are working from an assumption the reinsurance market is not supporting. Those who have stress-tested working capital against a 90-day rerouting scenario, amended LC terms on Gulf-origin cargo and reviewed force majeure clauses in active trade contracts are ahead of a cycle that is no longer optional.

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OCBC Group Research published a three-scenario framework on 9 March: Brent below USD 70 if flows normalise by mid-2026; near USD 100 through mid-year in a moderately severe scenario; and a spike toward USD 140 in an acute disruption. For practical treasury planning, a USD 80–USD 100–USD 120 band captures the actionable range.

CPI Pass-Through

CPI pass-through is the fastest-moving variable. OCBC estimated that every USD 10 oil price increase reduces current account balances by approximately 0.5% of GDP in Thailand, 0.4% in the Philippines and 0.3% in Malaysia.

ING’s Deepali Bhargava, regional head of Asia-Pacific research, identified the Philippines as carrying the “fastest pass-through” in ASEAN – retail fuel prices rose 5% immediately in March 2026, with a further 12% increase announced within days, and no effective subsidy buffer to absorb either move.

Indonesia and Malaysia slow the pass-through via subsidy regimes but OCBC warned every USD 10 increase could raise Malaysia’s fiscal deficit by 0.1%–0.2% of GDP and potentially double Indonesia’s fuel subsidy bill at sustained USD 100 oil.

The CFOs best positioned to manage through this are those who have already stress-tested cost models at USD 120, locked in currency hedges at USD 100 assumptions and mapped rate policy probabilities by individual market.

Currency and Rate Policy

Currency and rate policy diverge sharply. Nomura raised its conviction on Bank Negara Malaysia hiking rates under current conditions, while flagging BSP as at risk of holding rather than cutting in April. OCBC noted rate hikes could become possible in an acute scenario for the Philippines and Indonesia.

UOB senior economist Julia Goh observed that the BSP’s interest rate differential with the US has compressed to a historic low of 50 basis points – a hold may be insufficient to arrest peso weakness, let alone a hike. Thailand’s Bank of Thailand has historically shown patience through supply-side shocks, with a hold remaining the base case even at USD 120.

Goldman Sachs estimated that a six-week Hormuz closure at USD 85 oil would raise regional Asian inflation by approximately 0.7 percentage points.

Operating Cost Impact

Operating cost impact escalates non-linearly. At USD 80, pressure concentrates on logistics and transport lines. At USD 100, the industrial channel opens: Rayong Olefins, a Siam Cement Group unit, suspended petrochemical operations in Thailand in March after losing access to naphtha and propane.

At USD 120, force majeure declarations – already on record from Singapore’s Aster Chemicals and Indonesia’s PT Chandra Asri Pacific – become a regional pattern rather than an isolated event.

Goldman Sachs estimated that a six-week Hormuz closure at USD 85 oil would raise regional Asian inflation by approximately 0.7 percentage points. That price level has already been exceeded, and the duration threshold is approaching.

The CFOs best positioned to manage through this are those who have already stress-tested cost models at USD 120, locked in currency hedges at USD 100 assumptions and mapped rate policy probabilities by individual market. For those still working from a single regional assumption, that window is closing.

INSIGHT BOX

PASS-THROUGH ASYMMETRY

The Philippines transmits oil shocks immediately – retail prices rose over 17% in one week in March 2026, with no effective subsidy buffer. Indonesia and Malaysia slow pass-through via subsidies but transfer the cost to fiscal deficits instead. For CFOs, the variable that matters is not the oil price. It is which channel carries the shock to your cost base first, and how quickly.

The post The Hormuz Scenario Matrix: A CFO’s Framework for ASEAN Oil Shock Exposure appeared first on Bizruption Asia.

Despite both sides declaring their readiness to work together to solve the ongoing rift, the affair has been drawn out and exposed cracks in ties between Kuching and Putrajaya. Perhaps it is telling, then, that Abang Johari said ‘if’ and not ‘when’.

Malaysia has one of the most extensive natural gas pipeline networks in Asia

This is yet another problem of Malaysian politics’ own making which could have transnational consequences for energy diversification, economic stability, as well as consumer and investor confidence.

Business Environment and Regional Economic Stability

For those not in the know, a quick recap. Malaysia is one of the leading oil and gas producers in Southeast Asia and a key player in the global energy market, according to the U.S. Energy Information Administration. Moreover, in 2023, there were 19 new discoveries which could add over a billion barrels of oil equivalent, according to Petronas.

It is worth noting that in the context of the current Petronas-Petros tiff, 16 of these discoveries are located in Sarawak. The remaining three are in neighbouring Sabah, and none in the Peninsular.

Furthermore, Malaysia has one of the most extensive natural gas pipeline networks in Asia, transporting processed natural gas to the power sector and to non-power end-use sectors and exporting natural gas to Singapore.

Malaysia also exported 1.3 million barrels a day (b/d) of petroleum products in 2023, a 7% increase from the previous year, with the Asia Pacific accounting for 79% of these.

Simply put, if the uncertainty prolongs, there are likely to be inefficiencies in distribution and management that impact price stability. The key here is to ensure that the roles of Petronas and Petros are clearly delineated to avoid supply disruptions that will hurt consumers and businesses alike.

Regulatory instability and the risk of disrupted energy supply could also hinder Malaysia’s ability to attract domestic and international investors, who may be wary of committing to long-term energy projects the longer this prolongs.

That would put the brakes on Malaysia’s impressive post-pandemic economic performance, with waning consumer, investor and international confidence likely to also be exacerbated by geopolitical uncertainty and the global energy diversification agenda.

Ripple Effects

At the heart of Sarawak’s case is the objective of securing gas aggregator rights, meaning it would control LNG export allocations. Petronas’ diminished role here would cut into its profits—which CreditSights projects could be as much as 11%.

With Petronas being a major contributor to the nation’s coffers, a new dynamic in the national energy sector has far-reaching consequences.

While Petronas’ existing commitments to international customers are not in jeopardy, there is no indication of future sale agreements or contract renewals upon expiry.

The uncertainty isn’t just with regard to future contracts, either, as the possibility that Sarawak may seek additional rights could compel other states to at the very least ask for a bigger share of profits. That will change capital expenditures and national contributions, potentially deterring investors.

Political Wrestling Poses Regional Risks
At the heart of the dispute is the question of political control over Malaysia’s energy resources. The decentralisation of control could lead to fragmentation within Malaysia’s energy sector, complicating national-level energy policy and regulatory frameworks.

This could result in a fragmented and inefficient energy system lacking coordination. For the Asia-Pacific region, this could create uncertainties about Malaysia’s role as a stable energy exporter and partner in regional energy agreements.

This could fuel regional tensions and prompt other countries in the region to reconsider their own energy governance structures. What could then happen is an insularity that complicates efforts to establish a unified regional energy market.

For Purtrajaya, then, it is walking the tightrope of states’ rights and national unity, which will be a litmus test of their governance.

It, however, also presents an opportunity for the current administration to make good on its commitments to drive Malaysia into the future sustainably.

Having long delayed shedding its dependence on fossil fuels, the changing role of Petronas could just be the perfect opportunity for Putrajaya to drive energy diversification with gusto.

Make no mistake, this is a once-in-a-lifetime chance that could define Anwar’s tenure in Perdana Putra; whether he and his unity government has the political will and nous to do that remains to be seen.

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