Asian economies may well flinch as oil prices scale new highs again, but they are unlikely to buckle given efforts across the region to cut exposure to costly crude. On the surface, a sustained rise in oil prices, which hit a peak of $78.40 last week, should have a significant impact on economic growth.
Virtually all of Asia imports oil and as crude prices continue a four-year climb the oil burden has only swelled - oil imports now account for around a quarter of South Korea's import bill and about a third of India's.
A rise in oil prices to $80 and beyond should cause some pain in countries such as India, which has a wide current account deficit. But Asian economies in general are unlikely to take a significant knock, economists say.
-- A scaling back of costly fuel subsidies has lowered the strain on state finances, while most Asian countries have current account surpluses.
-- Strength in exports and buoyant labour markets remain a strong buffer to high oil prices and support consumer sentiment.
-- Currency gains help offset the impact of oil, which is bought and sold in dollars. The Thai baht has risen eight percent so far in 2006, the Korean won is up six percent.
-- "Clearly, the region has held up better than expected in the face of nearly $80 oil," said Adam Le Mesurier, an economist at Goldman Sachs.
-- "The important thing is to let economies take a hit and adjust to high oil. The economies that have been forced to do that have done very well."
In the past, governments shielded consumers from firm oil prices by subsidising fuel. But the cost of this has risen in line with oil prices, which were about $20 in early 2002, putting pressure on state finances and causing subsidies to be scaled back.
This scaling back means that an adjustment to an era of high oil prices has now taken place. India raised petrol prices by 9.2 percent in June, China in May lifted retail gasoline and diesel prices by 10-11 percent. Malaysia raised the pump prices of petrol and diesel in February while Indonesia more than doubled fuel prices in late 2005.
-- "A lot of adjustments have been made already so the adjustment economies have to make in 2006 is minimal," said Standard Chartered economist Joseph Tan. "A lot of Asian economies have learnt how to cope and are coping fine."
Thai motorists have also started switching their cars to run on liquefied petroleum gas or compressed natural gas amid persistent high oil prices.
Despite costly oil, Thailand's central bank and most analysts expect inflation to ease in the second half of 2006, due to high comparative prices a year ago when local subsidies for diesel ended. The annual inflation rate was 5.9 percent in June, from May's 6.2 percent, which matched a 7-year high hit last October.
Indonesia can weather the impact of surging oil prices on its budget and economy, Vice President Jusuf Kalla said last week.
The government gives cash to more than 15 million poor families to cushion the blow of fuel-price rises and analysts say the economy has held up well. Consumer confidence in June hit an eight-month high, partly due to a improved economic outlook.
-- "Certainly with Indonesia, oil subsidy costs are much less than previously," said Barclays Capital economist Nicholas Bibby.
-- As fuel is still subsided in India, Indonesia and Malaysia, these countries may face some pressure if oil pushes above $80.
-- A litre of petrol costs 1.92 ringgit ($0.52) in peninsular Malaysia, without a subsidy it would cost 2.46 ringgit.
-- State oil refiners subsidise oil in India and on average sell a litre of petrol around four rupees less than the cost price.
India is seen as particularly vulnerable given its wide current account deficit. The 2005-06 fiscal year deficit widened to its highest since economic reforms started in 1990-91.
And with oil prices high, India's central bank is expected to keep pushing interest rates higher to curb inflation. Malaysia's monetary policy bias is also seen remaining towards tightening.
Indonesia could delay plans to lower rates if crude continues to push higher.
"Indonesia wants to cut rates right now but the worry is that there may be a delayed pass through next year from further fuel-price rises," said Le Mesurier at Goldman Sachs. But with Asia's jobs markets and export growth holding up well, the region is expected to remain in a strong position.
Taiwan's June exports rose at their fastest annual pace since February. Singapore created 45,000 new jobs in the first quarter, the most in more than 10 years.
"In many countries high oil prices cause a drag on growth. But at the same time, incomes are rising with an improvement in employment and that helps to offset this to some extent," said Barclays' Bibby.