Wood Mackenzie: Japan and South Korea Face Highest Risk Amid Global Energy Surge

A new report by Wood Mackenzie highlights how the ongoing conflict in the Middle East is fracturing global power markets, leaving Asian nations particularly vulnerable. Spot prices for liquefied natural gas (LNG) in Asia have surged by 94% since the conflict began, significantly inflating electricity generation costs. Japan has emerged as the most exposed market globally, with 64% of its power generation dependent on imported coal and gas. South Korea also shows high vulnerability with a 56% exposure rate, while Italy leads European markets with a 47% reliance on imported fuels. In addition to gas, coal prices have climbed between 17% and 31% as a direct consequence of the geopolitical instability. Analysts suggest that these extreme dependencies create a divergence in energy security and place downward pressure on the JPY and KRW due to worsening trade balances.