Strait of Hormuz crisis reinforces need for Southeast Asia to tackle major energy vulnerabilities – News
Disruptions to oil and gas flows through the Strait of Hormuz have exposed structural risks in Southeast Asia’s energy sector, according to the 2026 Southeast Asia Energy Outlook from the International Energy Agency (IEA). The region faces shortages of liquefied petroleum gas (LPG) and petrochemicals, with energy import bills projected to reach $160 billion this year.
The Middle East accounts for 60% of Southeast Asia’s crude oil imports, the IEA report finds. Nearly half of the oil products refined or consumed in the region originate from Middle East crude oil. This dependency has led to immediate shortages of chemical products and petrochemical feedstocks following the virtual shutdown of shipments through the Strait of Hormuz.
Governments are currently using emergency measures to manage these short-term impacts. These include encouraging public transport use and allowing residents to work from home to curb demand.
Why are energy import costs projected to rise?
Southeast Asia’s energy import bill may climb from $160 billion this year to $400 billion by mid-century, according to current policy settings. This figure would represent 5% of the region’s economy. IEA Executive Director Fatih Birol stated the region is set to account for 20% of global energy demand growth over the next decade, second only to India.
Power demand is growing twice as fast as overall energy use. In the next decade, this increase could equal Japan’s total current electricity generation. This surge is driven by economic expansion, light industry growth, and a rising need for cooling.
Residential air conditioner stocks are expected to triple by 2035. Additionally, one in five cars sold in Southeast Asia is now electric, and the current crisis may prompt further policy support for electric vehicles (EVs).
How is the region diversifying its energy sources?
The IEA report identifies an emerging preference for domestic energy resources. Some nations may develop untapped domestic oil and gas, though the report suggests more investment is flowing toward other alternatives.
Renewable power capacity is set to nearly triple within a decade under existing policies. While coal remains a major component of the energy sector, it could receive additional support as countries prioritize energy security.
Nuclear power is viewed as a longer-term diversification option. Several countries have shown growing interest, but the IEA notes that the success of nuclear energy will depend on reining in long construction lead times and accelerating deployment.
What happens next for regional energy cooperation?
Stronger regional cooperation could deliver substantial benefits for oil security and industrial strategies, according to the IEA. The ASEAN Power Grid project is cited as a mechanism that could enhance electricity security and deliver cost savings.
The IEA launched its first Regional Cooperation Centre in Singapore last year to support these adaptations. Fatih Birol emphasized that diversification of supply routes and energy sources is now a central priority.
Future resilience may depend on stronger policy action regarding energy efficiency. The IEA describes efficiency as a cost-effective way to strengthen the region’s position during the current crisis and in the long term.
Frequently Asked Questions
What caused the current energy shortages in Southeast Asia?
The shortages were triggered by a conflict in the Middle East and the virtual shutdown of energy shipments through the Strait of Hormuz.
How much of Southeast Asia’s crude oil comes from the Middle East?
The Middle East accounts for 60% of the region’s crude oil imports, according to the IEA report.
Which country saw a significant spike in solar imports?
The Philippines became the second-largest destination for Chinese solar exports in Q1 2026, with imports three times higher than in Q1 2025.
Do you believe regional power grids are the most effective way to reduce dependence on foreign energy imports?