Taiwan might not face immediate supply disruptions in crude oil and liquefied natural gas (LNG) due to the escalating US-Israeli war on Iran, but it must enhance its energy resilience by diversifying its sources to avoid surges in imported fuel costs as inflation fears grow.
Taiwan is heavily reliant on imported fuel, with 96 percent of its overall energy supply coming from overseas — primarily crude oil, coal and LNG — due to lack of local natural resources, Energy Administration statistics showed. Taiwan is not the only country facing energy supply issues; Japan and South Korea are also striving to diversify energy sources and increase domestic supply to minimize shortage risks.
Taiwan has secured 20 LNG shipments to fuel the country for this month and next month, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) told a media briefing on Monday. The ministry aimed to increase the supply to 22 vessels within the week, Kung said, brushing off worries about LNG supply disruptions in the short term.
About one-third of the nation’s LNG is imported from Qatar, with 60 to 70 percent coming from areas less affected by the conflict, Kung said. Iran has vowed to attack any ships that try to pass through the Strait of Hormuz, essential for Qatar’s LNG exports and about 20 percent of global crude oil consumption. Qatar has suspended LNG output due to the conflict.
Kung said it was “impossible” that local households would experience supply disruptions, as household consumption accounts for only about 5 percent of LNG consumption. LNG power generation is critical to Taiwan, accounting for 42 percent of electricity generated in 2024, according to the Energy Administration.
The tensions raised concerns over Taiwan’s LNG supply resilience, as the nation only has 11 days of LNG reserves, compared to about 100 days of crude oil reserves.
It can be difficult to obtain extra LNG from global exporters, given a rigid infrastructure of long-term contracts and low market flexibility.
While Taiwan might not face a short-term risk of energy supply shortages, energy costs are rising as new supplies are acquired from the spot market, which is characterized by high price volatility and greater delivery uncertainty.
Global LNG prices are 50 percent higher than the same period of last year, according to Reuters.
Taiwan and neighboring countries could still face a higher inflation risk if the conflict drags on. Taiwan’s consumer price index rose 1.75 percent last month, still below the central bank’s 2 percent inflation alert, but surging energy costs would push consumer prices past the red line.
Kung on Monday said the government would not consider hiking electricity rates during a meeting on energy costs scheduled for later this month. He said keeping consumer prices stable is the ministry’s priority.
Taiwan has been attempting to diversify its energy sources to rein in inflation and keep its economy moving. The country is increasing energy supply from the US and other countries to boost energy resilience, the Energy Administration said last week, before US strikes on Iran.
CPC, Taiwan Corp last year signed a 25-year LNG supply agreement with Texas-based Cheniere Energy Inc, the agency said. About 15 to 20 percent of Taiwan’s LNG supply should be imported from the US by 2029, up from 10 percent, the administration said.
To minimize the long-term risk from imported energy, the government needs to beef up its energy transformation efforts and support renewable energy supply domestically. Renewable power accounted for 12.8 percent of power generated last year, Taiwan Power Co statistics showed.
South Korea and Japan have pledged to increase green energy financial support with subsidies to private companies as part of their efforts to reduce reliance on imported energy. Taiwan needs to pick up pace in rolling out new policies such as incentives or special funds to drive renewable energy generation.
The conflict in the Middle East has been disrupting financial markets, raising concerns about rising inflationary pressures and global economic growth. One market that some investors are particularly worried about has not been heavily covered in the news: the private credit market. Even before the joint US-Israeli attacks on Iran on Feb. 28, global capital markets had faced growing structural pressure — the deteriorating funding conditions in the private credit market. The private credit market is where companies borrow funds directly from nonbank financial institutions such as asset management companies, insurance companies and private lending platforms. Its popularity has risen since
The Donald Trump administration’s approach to China broadly, and to cross-Strait relations in particular, remains a conundrum. The 2025 US National Security Strategy prioritized the defense of Taiwan in a way that surprised some observers of the Trump administration: “Deterring a conflict over Taiwan, ideally by preserving military overmatch, is a priority.” Two months later, Taiwan went entirely unmentioned in the US National Defense Strategy, as did military overmatch vis-a-vis China, giving renewed cause for concern. How to interpret these varying statements remains an open question. In both documents, the Indo-Pacific is listed as a second priority behind homeland defense and
Every analyst watching Iran’s succession crisis is asking who would replace supreme leader Ayatollah Ali Khamenei. Yet, the real question is whether China has learned enough from the Persian Gulf to survive a war over Taiwan. Beijing purchases roughly 90 percent of Iran’s exported crude — some 1.61 million barrels per day last year — and holds a US$400 billion, 25-year cooperation agreement binding it to Tehran’s stability. However, this is not simply the story of a patron protecting an investment. China has spent years engineering a sanctions-evasion architecture that was never really about Iran — it was about Taiwan. The
After “Operation Absolute Resolve” to capture former Venezuelan president Nicolas Maduro, the US joined Israel on Saturday last week in launching “Operation Epic Fury” to remove Iranian supreme leader Ayatollah Ali Khamenei and his theocratic regime leadership team. The two blitzes are widely believed to be a prelude to US President Donald Trump changing the geopolitical landscape in the Indo-Pacific region, targeting China’s rise. In the National Security Strategic report released in December last year, the Trump administration made it clear that the US would focus on “restoring American pre-eminence in the Western hemisphere,” and “competing with China economically and militarily
RSS