Asia hopes Democrats can provide relief from Trump's Iran war, tariffs: Russell

By Clyde Russell

LAUNCESTON, Australia, Nov 4 (Reuters) - Asian nations that have borne the brunt of the US-Israeli war on Iran and US President Donald Trump's trade tariffs are hopeful that Democrats will be able to temper his most harmful policies.

Democrats were on track to claim the House of Representatives and the Senate in US midterm elections, with early results from Tuesday's voting showing gains against Republicans.

While Trump will remain in office, his ability to get his way might be constrained by Democrats, who can use congressional powers to control government spending and launch investigations into Trump, his family and his allies.

The Iran conflict is the most pressing issue for Asian countries, especially importers of fossil fuels like crude oil, refined products and liquefied natural gas (LNG).

The war launched by the US and Israel on February 28 has seen energy prices surge across Asia, especially for refined fuels, with Singapore gasoil - the building block for diesel - closing at a record high of $199.89 a barrel on March 30.

It has since eased to end at $164.18 a barrel on Tuesday, but this is still 80% higher than the $91.42 from the day before the Iran war started.

Spot LNG prices for delivery to North Asia have tripled since the start of the conflict to $32.50 per million British thermal units, while Australian thermal coal at Newcastle Port , a grade popular with utilities in Japan and South Korea, has jumped 30% to $151.15 a metric ton.

It's not just the price increases that have spooked Asian economies; there have also been issues with securing supply, given the continent was the destination for about 80% of crude oil and refined fuels from the Middle East.

Australia, the world's largest importer of diesel and a close US ally, had to scramble to ensure sufficient supplies in the early months of the conflict, effectively leveraging its exports of coal and LNG to ensure buyers of these products were able to supply liquid fuels in return.

Asian energy importers will be hoping that Democrats can limit Trump's ability to continue the war against Iran, while at the same time encouraging a diplomatic end to the conflict.

If Asian economies are to lower the risk of recession, then limiting energy-led inflation is seen as vital.

TRADE TARIFFS

Asian countries, particularly US allies such as Japan, South Korea and India, will also be hoping that Democrats in Congress will be able to moderate the worst impacts of Trump's trade policies, which have seen unilateral tariffs imposed and unrealistic promises made in order to seal deals offering some relief.

There is a Trump policy that many Asian countries will be hoping continues: his administration's efforts to build supply chains outside China for critical minerals.

This has seen US investment into mines and processing facilities and an increase in capital available for new projects.

Given that there is bipartisan support for many of these efforts, it's likely that Democrats would be broadly supportive of continuing to invest in minerals like rare earths, tungsten and lithium, with the caveat that they may want to launch investigations into companies with ties to Trump that have benefited from funding.

Overall, what Asian nations that are traditional friends of the US want most out of Democrats is a brake on Trump's impulsive decision-making, an end to the conflict in the Middle East, a rolling back of trade tariffs and more consistency in how allies are treated.

For countries that are less friendly to the US, or are seen as rivals, such as China, a return to a more predictable foreign and trade policy would be welcome.

The main risks are doubts as to whether Democrats will be able to rein in Trump, given his cavalier attitude to obeying legislation and previously followed rules.

There is also wariness over the risks presented in the next two months until the new Congress first sits on January 3, with fears Trump may be tempted to use the window of a lame-duck but still Republican Congress to revive the Iran war and enact more trade tariffs.

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The views expressed here are those of the author, a columnist for Reuters.