April Risk Barometer

ASIA-PACIFIC | COLOMBIA

In Global Guardian's monthly Risk Barometer, our Intelligence Team highlights current global hotspots with the potential to impact your business operations and travel. Read below for analysis on the threats we are closely monitoring this month and click here to subscribe for regular intelligence updates.

APAC Fuel Crisis Portends Wave of Unrest

The de facto closure of the Strait of Hormuz—normally a conduit for roughly a fifth of the world’s oil and other key commodities—has induced an unprecedented energy supply shock. In Southeast Asia, fuel shortages are severely disrupting business operations, transportation, and travel. As the crisis persists, its socio-economic effects will compound, making civil unrest more likely. While the Southeast Asian region is the most exposed, acute energy shortages and their effects are spreading to Europe and Africa.

• Global Guardian advises firms to conduct pre-travel assessments before sending personnel to the Philippines, Thailand, Indonesia, or Vietnam.
• Firms with assets, operations, or personnel in Southeast Asia should create contingency plans for the possibility of complete or near-complete fuel outages.
• Personnel should avoid all protests as demonstrations can quickly escalate into violence.
• Firms with vehicle fleets and/or facilities that have fuel storage capacity should assess site and asset security and prepare for the possibility of increased fuel theft.

Situation Report

Prior to the Middle East conflict, roughly 84% of the crude oil and 83% of the natural gas leaving the Strait of Hormuz was bound for Asia. This flow of hydrocarbons has been reduced by more than 90%, leading Asian countries to enact a tranche of emergency measures affecting work and travel.

On 24 March, the Philippines became the first country to declare a national state of emergency. Manila has shifted government offices to a four-day work week, suspended fuel taxes, and has begun paying out fuel and fertilizer subsidies to fishing and agricultural operations to insulate food prices from the energy shock. Multiple municipalities and regional governments across the country have also declared states of emergency allowing them to draw from rainy-day funds to pay out subsidies to public transportation and other essential workers. Regardless, hundreds of transportation workers in the capital went on strike on 26 March due to fuel costs, and further strikes and protests are likely.

Similar or more drastic measures are being enacted across the region. Fuel rationing is being legally enforced in Sri Lanka, Myanmar, Bangladesh, and Indonesia. In Thailand, Vietnam, Pakistan, South Korea, and Australia policies approaching rationing—such as price caps, export bans, curfews, or voluntary rationing campaigns—have been adopted. Countries throughout the region, including India and other large economies, have instituted exceptional fuel-related policies.

The regional fuel shortage has been particularly pronounced with respect to jet fuel, which in Asia has reached $208.79 a barrel—double the global average. Multiple regional airlines have already started cutting some domestic flights, including in Thailand, Myanmar, Vietnam, the Philippines, Australia, and New Zealand. In the Philippines and Vietnam, many international flights are overloading on fuel at foreign airports before returning due to a lack of available supplies domestically.

Analysis

Southeast Asia is particularly exposed to the primary energy shock of this closure due to its lack of buffers. The larger regional economies in Asia—China, India, Japan, and South Korea—accounted for roughly 70% of Hormuz-sourced hydrocarbons prior to the closure, with the rest of Asia accounting for just under 15%. However, unlike the Philippines and Australia, whose reserves account for between 30 and 50 days of use depending on the fuel type, China, South Korea, and Japan have fuel reserves sufficient for between 200–250 days. This buttress has allowed East Asia to weather the initial shock without resorting to the more aggressive preparatory policies seen to its south.

Even if the Strait is reopened, it will take weeks to restore previously normal energy flows and months to attain previous price levels. While price mechanisms are quick to raise costs in the face of a crisis, they are not equally rapid in reducing costs once that crisis is resolved. Further, while energy is a significant primary cost, it also feeds into a range of secondary markets, including chip manufacturing, which is affected by a lack of helium, as well as food production, which is directly affected by shortages of fertilizer and fertilizer precursors that are also shipped in significant quantities through Hormuz. The inevitable price increase for semiconductors will translate downstream into higher costs both to businesses and consumers that rely on chip-dependent products from cellphones to washing machines to electric vehicles.

Effects in the food sector are already beginning to manifest. In Thailand, Indonesia, and Malaysia, petrochemical and fertilizer production companies have been shuttered or have declared force majeure in anticipation of defaulting on contracts. These facilities represent their own bottlenecks for food production as well as palm oil and other agricultural industries that constitute key drivers for employment or key raw materials in subsequent production lines. 

Looking Forward

The shortages stemming from the Strait’s closure—and the improbability of their rapid amelioration even in the event of the Strait’s reopening—will create uneven economic pressure globally. Countries are facing the choice of increased inflation and associated drop in real wages, balance of payments issues that could hurt exchange rates, significant drops in employment and overall economic growth, or some combination of the three. For poorer countries, the negative effects of the crisis will compound. As wealthier countries draw down their reserves and begin purchasing a higher proportion of the remaining 80% of the world’s hydrocarbon supply, the cost of fuel will increase.

Even as physical oil market prices hit record highs, costs must still increase significantly to curtail demand for the 10 million barrels of oil per day that are now missing from the global market. The political consequences of an uneven distribution of the costs of this price rise across rich and poor countries, and across social classes within both rich and poor countries, are very likely to induce significant civil unrest. Government failures to provide essential services, corruption increasingly translating into widespread protest movements, and a global spike in unemployment could produce a wave of civil unrest in addition to travel and operational disruptions.

Political Violence Risks Increase Ahead of Presidential Election

Political violence poses an elevated risk to organizations and travelers operating in Colombia amid one of the nation's most violent presidential election cycles in decades. So far, at least 61 political leaders have been killed, rebels have attacked a polling site and soldiers providing election security, and candidates face severe threats in roughly a third of the country's municipalities. Armed groups, whose power has expanded after peace negotiations collapsed, are carrying out prior threats to disrupt the political process.

• Travelers should exercise heightened caution in Cauca, Arauca, Guaviare, Caquetá, Chocó, Antioquia, and Norte de Santander, where active armed group presence and weak state control make election-related violence and disruptions more likely.
• Avoid common targets of insurgent violence, such as polling stations, government offices, and security installations.
• Monitor official Colombian government alerts and local news media for indicators of election-related violence.

Situation Report

Colombian voters will head to the polls on 31 May, and if no candidate secures an outright majority, a runoff election between the top two contenders will be held on 21 June. The elections are taking place under heightened threat conditions, as armed and insurgent groups are actively seeking to intimidate voters, target candidates, and disrupt polling operations in high-risk regions. The presidential contest comes just two months after Colombia’s 08 March legislative elections, which were marred by significant security incidents, including candidate kidnappings, widespread death threats, and emerging risks such as weaponized drones.

• On 05 February, the security convoy of Colombian Senator Jairo Castellanos was attacked in Arauca, killing two of his bodyguards, while three other people were briefly kidnapped and later released. The National Liberation Army (ELN) guerrilla group is suspected of carrying out the assault, prompting President Gustavo Petro to offer a reward and strengthen security measures amid rising political violence before the legislative elections.
• On 10 February, Senator Aída Quilcué was kidnapped while driving in a remote part of the Cauca department, the same region where she was attacked by militants in 2022, and her husband was slain in 2008 in an assassination attempt meant for her. She was held by an armed group, likely the Revolutionary Armed Forces of Colombia (FARC) Estado Mayor Central (EMC) faction, for several hours before being released.
• On 09 March, the day of Colombia’s legislative elections, FARC dissident guerrillas used a weaponized commercial drone to attack a polling site in La Macarena, in Meta. Poll workers were forced to pause vote counting and seek shelter until the military could reestablish control of the area.
  

Analysis

Armed groups in Colombia have a strong interest in influencing elections to install or maintain local and regional politicians who will allow them to operate freely, protect their illicit economies, and shield them from military pressure. This comes as the Colombian military is at its weakest point in years. The size of Colombia’s armed forces has been reduced by 25% under President Petro's "total peace" policy, its territorial control has been eroded, and nearly all indicators of violence, including extortion, kidnapping, and forced displacement, have risen. The changing balance of power between armed groups and the government means security forces are overstretched, creating security gaps which armed groups will seek to exploit.

Looking Forward

Sustained violence targeting candidates, security forces, and election infrastructure in rural departments is very likely throughout the election cycle, as armed groups are determined to disrupt and influence the election in their favor. The threat of election-related violence is geographically distributed, with the highest risk in rural regions with limited state control, a history of threats to the political process, and the presence of warring armed groups. The accompanying map highlights the expected risk of election-related violence by Colombian municipality.

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