Asia, which imports 60% of its crude oil from the Middle East, is the most exposed to the energy shock triggered by the Iran war. Brent crude prices have risen by 55% since the conflict began on February 28. As a result, Asian countries are potentially facing a cycle of rising energy costs, imported inflation, demand destruction and weakening currencies. Many central banks in Asia are facing an "FX intervention trilemma", according to Bob Savage, head of markets macro strategy at BNY. The physical shortage of oil across the continent means Asian buyers must pay a premium on physical cargoes and refined products. If the conflict continues, authorities across Asia may be compelled to dip into their FX reserves to counter inflationary pressures.