Continued rise in oil prices could adversely affect Asia

The impact of high oil prices on Asian economies is felt primarily through rising inflation and a possible fiscal impact if the subsidy burden rises. An oil-price shock would have a similar impact to a surprise Fed rate hike. Additionally, it would strain external and fiscal positions, especially for countries that have enjoyed windfall savings from lower oil prices in the past 8-10 months, says Standard Chartered. India and Indonesia would be the most vulnerable to a sustained rise in oil prices (along with Pakistan and Sri Lanka). 

Lower oil prices have helped both countries to reduce subsidies and improve their fiscal positions. On the external front, higher oil import prices would result in weakening trade balances and could pressure their currencies, in turn putting upward pressure on inflation. A severely adverse economic impact on these countries in the short term is expected.

Other oil importers in Asia would be similarly affected, albeit to a lesser extent. Thailand is a large net oil importer, and Thai consumers spend more on energy and transport than their counterparts in other Asian countries. Korea - the world's seventh-largest oil importer - would have to let its currency bear most of the pain. 

Similarly, in the Philippines, inflation would likely rise significantly. Malaysia could benefit, as the government could use higher oil prices to facilitate the more efficient transfer of economic resources and structurally improve the fiscal position, added Standard Chartered.