Donald Trump says the Strait of Hormuz is now American territory. It isn’t, and everyone knows it. But six months into the Iran war, this is where things stand: the ceasefire MoU between US & Iran has expired, Washington threatens to bomb Oman, a US ally, for brokering its own deal with Tehran, and things are worse off for the whole world than when the war started.
While a total global energy collapse remains narrowly averted, the reassurances Asia’s businesses leaned on this year are running out. The US Strategic Petroleum Reserve has fallen below 300 million barrels, to its lowest level since the early 1980s. Meanwhile, traffic through the Strait of Hormuz remains at a virtual standstill with Iran refusing to open it until the US lifts its naval blockade.
Elsewhere, financial markets are gripped by anxiety. On 1 August, the US Treasury intervened to buy yen after it hit a 40-year low – the first time Washington has deployed capital to prop up the currency since the 1998 Asian Financial Crisis. This aggressive move to head off a chaotic yen-carry trade unwind exposes the deep vulnerability of the US bond market, where long-term yields have surged following the move. Spurred by regional energy blockades, Asia’s monetary policy is now fully entangled in this geopolitical friction. More dominoes might be falling really soon.
ASEAN’s Foreign Ministers met against this backdrop in Manila in July: the region is heavily impacted by global developments i.e. the energy crisis at the onset of the Iran conflict, geoeconomic strategic alignment over critical minerals and semiconductors, and US tariffs. At the same time, issues closer to home linger unresolved – South China Sea tensions, the Thai-Cambodian conflict and the Myanmar issue. How could ASEAN navigate these uncertain external factors that are controlled exclusively by major powers while resolving its own internal issues? I unpacked this set of quandaries during my interview on Taiwan Talks.
Two analyses from our team cut straight through the noise. Conor Salcetti’s Resource Nationalism op-ed tracks how Jakarta, Kuala Lumpur, Hanoi & Bangkok are tightening state control over commodity exports. From Indonesia’s Danantara play to Thailand’s palm oil lockdown, he explains why companies should not treat these as a series of one-off events. Khu Yen Sin’s piece, “Chinese Bodies, American Brains”, names what most manufacturers still refuse to see: that China dominates the robot race, the US dominates its brain, and that the gap is closing faster than boardrooms on both sides are pricing in.
This is precisely the kind of exposure our newly launched Geopolitical Exposure Assessment is built to catch. Most businesses fail to discover their geopolitical exposure until after it costs them. Our structured assessment is an early-warning system that maps your company’s geopolitical exposure by showing you exactly where your business is exposed to trade scrutiny, supply chain disruption or regulatory risk, and what you should do about it. Try it for free here, or talk to us.
What’s Ahead: September brings two events companies should watch closely. Xi Jinping’s Washington visit is being branded as a stabilizing force to the US-China relation, but the real test is whether it extends the trade truce set to expire in November, not how congenial the photos look.
The same month, the USTR is expected to announce findings from its Section 301 excess capacity investigation, which will form the basis for new tariffs to be imposed. We will be watching both, and informing you what they mean beyond the headlines and how they could impact your business.
Ivy Kwek
Founder & CEO, Aurora Insights
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