Asia-Pacific economies are taking urgent steps, from capping domestic fuel price hikes to suspending petroleum product exports, to ensure energy security as oil prices soar amid the Middle East conflict.

Crude oil prices neared $120 per barrel on Sunday after Gulf oil producers — including Kuwait, the United Arab Emirates, and Iraq — announced that they were cutting output amid the escalating crisis in the region and the closure of the Strait of Hormuz shipping lane.

Brent crude was trading at more than $100 per barrel during Asian trading hours on Monday — the first time since July 2022. The surge in oil prices has sent shock waves across Asia, which relies on oil and gas imports from Gulf countries for its domestic energy needs.

South Korean President Lee Jae-myung urged authorities to introduce a cap on domestic fuel prices, called for the expansion of the 100 trillion won ($66.9 billion) market stabilization program, and vowed to look for other energy sources.

Japanese Prime Minister Sanae Takaichi said that the government is mulling steps to cushion the local economy from rising oil prices. However, she ruled out overhauling the government's draft fiscal 2026 budget.

Vietnam's Ministry of Finance has proposed reducing the tariffs on several gasoline and oil products to zero, while Philippine President Ferdinand Marcos Jr asked Congress to grant him emergency powers to reduce excise tax on petroleum products.

Thailand has suspended its exports of petroleum products, mandated an increase in oil traders' reserve obligations from 1 to 3 percent, and boosted its oil reserves through imports from the United States and West Africa.

Analysts have forecast that a prolonged conflict in the Middle East would put pressure on the economic outlook in the Asia-Pacific.

"Sustained oil prices at high levels will impact almost all Asia-Pacific economies negatively as they continue to rely significantly on oil imports to meet their energy needs, despite diversification efforts," Priyanka Kishore, director and principal economist at the Singapore-based consultancy Asia Decoded, told China Daily.

Japanese investment bank Nomura said that Asia is facing "a stagflationary shock", and its severity will depend on the duration of the oil supply disruption.

It said Thailand, South Korea, and India are the "most vulnerable" to an energy shock, owing to their high net energy imports and concentration risk with the Middle East.

Soaring oil prices and concerns about how this would affect economies spooked stock markets across Asia during Monday's trading.

South Korea's benchmark Korea Composite Stock Price Index fell 5.96 percent while Japan's Nikkei 225 closed 5.2 percent lower. Australia's S&P/ASX 200 was down 2.85 percent, hitting a new one-month low, and India's S&P Bombay Stock Exchange Sensitive Index opened 2.36 percent lower.

Alicia Garcia-Herrero, chief economist for Asia-Pacific at the French investment bank Natixis, said that except for Malaysia, which is a net energy exporter, and China, which has adequate strategic energy reserves, the soaring oil prices are "mostly terrible for everybody".

Yang Han in Hong Kong and Yang Wanli in Bangkok contributed to this story.