Energy crisis intensifies! Multiple countries forced to implement a "4-day workweek," flights grounded, and the chemical industry comes to a standstill

Rising energy prices are pushing Asia into a full-blown demand destruction crisis. According to the Wind Trading Platform, a commodity research report released by JP Morgan on March 19 shows that as the supply of refined oil products tightens sharply, several Asian economies have been forced to take emergency energy-saving measures, with airlines cutting flights and petrochemical companies declaring force majeure. The energy shock is rapidly spreading from price levels to the real economy. In the past 10 days, the shipment volume of refined oil products from major Asian exporting countries has decreased by about 30% compared to a five-month baseline level, and preliminary data from the latest week shows that the decline has further expanded to 35%. Among them, the drop in aviation kerosene is the most severe, exceeding 40%; gasoline has fallen by more than 30%; and diesel has also decreased by over 20%. JP Morgan warns that if the average price of Brent crude oil remains at $100 per barrel in March, the price effect alone will reduce global oil demand by about 1 million barrels per day in April. This estimate does not yet account for additional losses from flight cancellations in the Middle East and physical shortages. For investors, demand destruction is no longer a forecast scenario but a reality that is happening. Multiple governments implement emergency energy-saving orders, diesel becomes the most urgent bottleneck The sharp rise in diesel prices has become the most direct economic bottleneck in this round of crisis, affecting transportation and freight logistics, forcing governments to compress demand through administrative means. According to the JP Morgan report, the Philippines and Sri Lanka have successively implemented a four-day workweek to reduce diesel consumption and delay the depletion of inventories. Bangladesh has moved the Eid holiday forward and allowed universities to close early to save fuel. Pakistan has closed schools and shifted university courses online. Thailand and Vietnam have required officials to walk, climb stairs, work from home, and reduce travel, while Myanmar has introduced odd-even traffic restrictions to lower road fuel demand. Meanwhile, authorities in multiple countries have directly intervened in the fuel market, implementing price control measures to stabilize supply order. Aviation industry hit hardest, peak season travel faces significant price increases Aviation kerosene prices are approaching $200 per barrel, prompting airlines to shift from cost control to directly cutting capacity, with many routes losing economic viability. According to the JP Morgan report, as of March 18, several Asian airlines, including Qantas, Air India, Cathay Pacific, and IndiGo, have successively introduced phased fuel surcharges. Among them, Air India charges a surcharge of up to $125 to $200 per passenger for long-haul tickets from Asia to Europe or North America, and domestic flights also incur an additional $4.30, effectively keeping many leisure travelers out of the upcoming summer travel season. According to Reuters, Scandinavian Airlines (SAS) has announced the cancellation of about 1,000 flights in April; Air New Zealand has also canceled over 1,000 flights due to soaring fuel costs, becoming one of the first airlines to significantly cut capacity due to the impact of rising oil prices The petrochemical industry chain is broken, and multiple giants announce force majeure The energy crisis has spread from the demand side to the supply side, causing the Asian petrochemical industry to come to a standstill due to raw material supply disruptions, with several regional leading companies announcing force majeure. According to a report by JP Morgan, over 50% of naphtha for Asian petrochemical companies comes from the Middle East, and the tightening of raw material supply in the Persian Gulf has directly led to the shutdown or reduction of production in cracking units. In Japan, Mitsubishi Chemical and Mitsui Chemicals have reduced ethylene production, and the restart plan for Chiyoda Ethylene, a subsidiary of Sumitomo Chemical, may be delayed, with capacity utilization limited even after restarting. In South Korea, one of the region's largest ethylene producers, YNCC, has announced force majeure, significantly reducing the operation of its cracking units; Lotte Chemical and LG Chem have warned customers that they may follow suit with similar measures; the South Korean government has temporarily classified naphtha as "economic security material" to manage the increasingly depleted inventory. In Indonesia, Chandra Asri announced force majeure due to a sudden interruption in raw material deliveries, leading to reduced operations. India has suspended the supply of liquefied petroleum gas to commercial users, prioritizing residential gas use, putting hotels and the catering industry at risk of forced shutdowns. Limited demand elasticity, a gap of one million barrels per day may emerge in April Quantitative analysis by JP Morgan indicates that oil demand is highly inelastic in the short term, with the speed and magnitude of price shocks transmitted to the consumer side structurally constrained. According to JP Morgan's estimates, the short-term price elasticity of global oil demand is approximately -0.024, meaning that oil prices need to rise by about 40% from the 12-month peak to reduce total consumption by 1%. The elasticity of different oil products varies significantly: naphtha has the highest elasticity because petrochemical companies can partially substitute ethane for cracking; jet fuel has the next highest elasticity, as airlines can cancel low-load flights; fuel oil has the lowest elasticity due to its difficulty in being replaced in essential services such as heating, shipping, and power generation. Based on the above elasticity estimates, if the average price of Brent crude oil remains at $100 per barrel in March, the price effect alone could reduce global demand by approximately one million barrels per day in April. Coupled with the additional impact of flight cancellations in the Middle East and physical shortages, the actual gap may be even larger.