As fighting in the Middle East intensifies, disruptions to global energy supply chains and sharp swings in international oil and gas prices are directly hitting Taiwan, which is heavily dependent on imported energy. Chi-Yuan Liang, Adjunct Research Fellow[A1.1] at the Taiwanese Economy Research Division of the Chung-Hua Institution for Economic Research (CIER), noted that the current crisis has exposed structural challenges in Taiwan’s energy system for both supply stability and price resilience, making policy adjustments and risk diversification a matter of urgency.
Heavy Dependence on Energy Imports Brings Dual Pressure on Supply and Price
Liang analyzed that the core of the current shock lies in the simultaneous contraction of supply and surge in prices. The Strait of Hormuz serves as one of the world’s most critical energy transit chokepoints. Any disruption there would significantly drive up international energy prices, with an impact already markedly greater than that of past regional conflicts. For Asian economies, which depend heavily on Middle Eastern energy, the consequences are particularly acute—and Taiwan is no exception.
From an energy security standpoint, Taiwan’s oil stockpiles can cover roughly 100 days of demand, but its natural-gas reserves amount to only about 11 days, well below the levels of major neighboring countries. With gas-fired generation now accounting for nearly half of Taiwan’s electricity mix, any disruption to gas supplies would directly threaten power stability, creating a chain reaction in which gas shortages trigger electricity shortages.
Taiwan’s power system has also operated with a relatively low reserve margin in recent years, highlighting limited buffer capacity. While the expansion of renewable energy supports the transition in Taiwan’s energy mix, the intermittent nature of renewables means nighttime electricity supply still depends on stable baseload generation. As geopolitical risks intensify, the resilience of the overall power system is coming under greater strain.
On the cost side, the recent sharp rise in international oil and gas prices—combined with the high share of fuel costs in total electricity generation costs—has gradually intensified upward pressure on electricity prices. Liang indicated that the current energy environment shows Taiwan must diversify its energy mix, expand reserve capacity, and improve power-dispatch mechanisms in order to balance a stable electricity supply, industrial development, and energy security.
Author: CIER Editorial Team
Date: March 26, 2026