The United States and Israel have launched "Operation Epic Fury," a surprise strike that killed Iranian Supreme Leader Ali Khamenei in an air raid. Iran's Revolutionary Guard has responded by declaring the Strait of Hormuz closed and threatening to fire on any ship that attempts to pass. International oil prices are surging, and Taiwan's energy supply chain is squarely in the line of fire.
Taiwan's Ministry of Economic Affairs insists that "everything is fine," stressing that Taiwan's oil and gas imports do not come solely from the Middle East. But in a tightly interconnected global energy market, that reassurance rings hollow. With the Strait of Hormuz under the gun and global prices spiking, can the Lai Ching-te (賴清德) administration really promise that the public can sleep peacefully?
Energy Crisis Déjà Vu
The Strait of Hormuz is the carotid artery of the global economy, and Iran is now holding a sharp knife to it. More than 150 oil tankers have been forced to sit idle in the strait. The Middle East conflict is at risk of hardening into a prolonged standoff, pushing oil into a new up-cycle, intensifying global inflation, dragging down growth, and driving US retail gasoline prices sharply higher. JPMorgan warns that if shipping through Hormuz is disrupted for three to four weeks, Brent crude could soar above $100 a barrel.
Taiwan is an island economy overwhelmingly dependent on imported energy. All oil and gas that CPC imports from the Middle East transit the Strait of Hormuz, and about 30 percent of Taiwan's natural gas comes from Qatar — caught in the same choke point. If Iran's retaliation escalates into wider war, global energy prices will spike across the board and feed directly into Taiwan's consumer prices.
"Energy Resilience" as Slogan
First, diversifying suppliers is not the same as securing transport routes. Taiwan does not buy all of its energy from the Middle East, but global energy prices move together. Once oil flows through Hormuz evaporate, prices in non-Middle Eastern regions — from the United States and Australia to Africa — will surge in lockstep. Even if Taiwan buys gas from 14 countries (led by Australia, Qatar, and the United States) and oil from 10 (led by Saudi Arabia, the United States, and Kuwait), runaway prices will still leave Taipower and CPC with massive losses. In the end, the bill will either be dumped on future generations through debt, or pushed onto households and businesses through steep electricity price hikes and higher inflation.
Second, Taiwan's energy chain has built-in vulnerabilities. Even when oil and gas originate from the US or Australia, large crude carriers and LNG tankers will face soaring freight and insurance costs in a turbulent security environment. Once the world slides into a wartime posture, energy allocation shifts from market logic to strategic calculus. When the US and its allies are struggling to protect themselves, can an energy-isolated Taiwan really count on a few procurement contracts to guarantee that tankers will arrive on time?
Third, natural gas is fundamentally different from oil. Taiwan holds roughly 140 days of strategic oil reserves, but gas is far harder to store. Current law requires only about 11 to 14 days of LNG storage, and the government itself admits that actual stocks are closer to 8 to 11 days. That means if sea lanes are cut for just half a month — because of wartime insurance suspensions, or because the PLA seizes the moment to stage military exercises — Taiwan's power system will be pushed to the brink of collapse.
In other words, at the most unstable geopolitical moment in decades, a country that depends on foreign ships for almost all of its energy has embraced the least storage-flexible power structure. With Khamenei dead and the Middle East sliding into cycles of religious revenge, where is Taiwan's much-touted "energy resilience"? Against the hard reality of transport disruption, the Ministry's proud claim of "buying from 14 countries" looks painfully thin.
The Mess Tsai Left Behind
More than 90 percent of Taiwan's energy is imported, so an oil price spike is pure imported inflation. At the same time, Taiwan's exports are heavily concentrated in AI-related supply chains. If the US economy slows, companies cut back investment, or the AI boom turns into a bubble, Taiwan's exports and stock market will stumble, dragging down domestic demand and growth. The central bank will then be forced to navigate the worst of both worlds: rising inflation and a cooling economy.
Gas supply is the sharpest vulnerability, and its origins are political as much as logistical. Purchasing Russian gas would directly contradict Taiwan's stated opposition to red supply chains. Alaskan gas remains untapped. Fuel rods from the Fourth Nuclear Power Plant have already been returned to the United States, closing that door. Former President Tsai Ing-wen (蔡英文) spent eight years in office winding down nuclear power and staking the grid on natural gas and renewable energy — targets that have yet to be met. The green power contracts handed to politically connected firms have produced little. What remains is a grid dangerously exposed to exactly the kind of supply shock now unfolding, and no serious fallback in sight.
Today's US-Iran conflict is both a real-world stress test of Taiwan's energy resilience and a verdict on the Lai administration's governance. After ten years of Democratic Progressive Party (DPP) rule, Taiwan's power system has become heavily dependent on natural gas. The Ministry of Economic Affairs acknowledges that current gas reserves cover only 8 to 11 days, while gas-fired plants supply an estimated 60 to 70 percent of the grid. Supplies are tight even in normal times; under today's extraordinary conditions, it is entirely reasonable to ask how long the system can hold.
Time to Rethink a Nuclear-Free Future?
The Lai administration has already announced a 3 percent natural gas price hike starting this month. For Taiwan's energy-intensive semiconductor fabs and its AI ambitions, that is a direct squeeze on profits and competitiveness. Imported inflation will test not just household budgets, but the resilience of Taiwan's social and political fabric.
Premier Cho Jung-tai (卓榮泰) has begun to soften his stance on energy, stepping back from the absolute "nuclear-free homeland" line and signaling openness to "new nuclear energy." The question is whether this crisis will finally be used as political cover for a serious rethink, rather than another round of empty slogans.
When Donald Trump swung his tariff sword, Cho told the public to "sleep peacefully," only to unveil tariffs of "20 percent plus additional levies" — worse than what Japan and South Korea faced. Now the Ministry of Economic Affairs again tells everyone not to worry about oil and gas shortages. With that recent track record, do businesses and citizens still dare to sleep peacefully?
With war spreading across the Middle East and the United States not ruling out a ground deployment for a prolonged campaign, the Lai administration can no longer hide behind feel-good language about "energy resilience." It must confront, head-on, the risks created by extreme import dependence, tight power supply, and mounting geopolitical exposure. That means moving quickly to stabilize oil supplies and prices, expanding alternative sources, and rebuilding Taiwan's energy system on something sturdier than wishful thinking.
