The Energy Squeeze: How the Iran War is Destabilizing Southeast Asia
Southeast Asia is currently facing one of its most severe energy crises in decades. As the conflict involving Iran, the United States, and Israel intensifies, Tehran’s decision to block the Strait of Hormuz has sent shockwaves through the region. For a territory of 700 million people that relies heavily on Middle Eastern fossil fuels, the blockade is not just a diplomatic hurdle—it is a direct threat to national security and economic stability.
The International Energy Agency has described the current situation as the “largest-ever” disruption in oil supplies. With oil prices skyrocketing and critical waterways closed, the region’s dependence on foreign energy has left many nations on the brink of exhaustion.
The Strait of Hormuz: A Strategic Chokepoint
The Strait of Hormuz serves as the primary artery for oil and gas flowing into Southeast Asia. Because so much of the region’s energy is routed through this single channel, Iran’s control over the waterway allows it to effectively choke global supplies. Whereas the blockade primarily targets the U.S. And its allies, the collateral damage to Asian economies has been profound.
According to the International Monetary Fund’s managing director, Kristalina Georgieva, a sustained 10 percent increase in energy prices over a year could slow global economic growth and increase global inflation by 40 basis points.
National Emergencies and Dwindling Reserves
The impact of the shock varies across the region, but the vulnerability is systemic. Studies by the Economic Research Institute for ASEAN and East Asia indicate that most Southeast Asian countries possess oil and LNG reserves capable of lasting only 20 to 50 days.
The Philippines: A State of Emergency
The Philippines is among the hardest hit, importing 90% of its oil from the Middle East. Facing a critical shortage, President Ferdinand Marcos Jr. Declared a national energy emergency. With only about two months of gasoline and diesel reserves for a population of 117 million, the government has turned to several emergency measures:
- Cutting fuel taxes and providing subsidies for the poor to combat rising prices.
- Implementing a four-day work week to reduce energy consumption.
- Seeking urgent assistance from Russia and China to secure fuel supplies.
Other Vulnerable Nations
Other regional players are facing similarly tight timelines. Data provided by Professor Indra Overland of the Norwegian Institute of International Affairs highlights the precarious nature of current reserves:
- Vietnam: 30 to 45 days of reserves.
- Singapore: 20 to 50 days of reserves.
- Thailand: Approximately 61 days of reserves.
The Producers’ Edge: Indonesia and Malaysia
Not every nation in the region is equally exposed. Indonesia and Malaysia are in a stronger position due to their status as substantial producers of natural gas and oil. This domestic production provides a critical buffer against the volatility of the Strait of Hormuz.
Though, even producers are not immune to the geopolitical tension. Indonesia has engaged in intensive diplomatic efforts to ensure its tankers can still navigate the strait. Recent successes include the safe passage of two Indonesian vessels, the Pertamina Pride and Gamsunoro, after negotiations between Jakarta and Tehran. The Indonesian Energy and Mineral Resources Ministry emphasized that these shipments are critical for maintaining national energy security.
Diplomacy as a Tool for Survival
Analysts suggest that ASEAN’s neutrality in the Iran war is its most valuable asset. By remaining neutral, Southeast Asian nations may be able to negotiate “safe passage” for their tankers. Granting such access allows Iran to project a diplomatic image to the global community while continuing its confrontation with the U.S. And Israel.
- Primary Cause: Iran’s blockade of the Strait of Hormuz.
- Most Vulnerable: The Philippines (90% Middle East oil dependency).
- Average Reserves: Most ASEAN nations have only 20 to 50 days of oil and LNG.
- Mitigation Strategies: Neutral diplomacy, emergency subsidies, and seeking alternative suppliers like Russia and China.
Looking Ahead
The current crisis has exposed the fragile nature of Asia’s energy market. As AI data centers expand and young populations drive economic growth, energy needs are projected to skyrocket over the next decade. The Iran war is forcing a structural rethink of energy security, pushing regional governments to diversify their sources and reduce their reliance on a single, volatile chokepoint.