The Impact of the War Against Iran on Southeast Asian Countries: Energy Security as a Case Study (2/2)

 

Dr Ahmed Abdel-Baqi

The first part discussed the economic importance of Southeast Asian countries (ASEAN) at both the regional and international levels. However, energy security—and the difficulty of achieving it—plays a critical role in shaping its importance, as it is linked to several variables in ASEAN. Let us review some of the factors that hinder the full realisation of energy security in ASEAN countries, which can be divided into external and internal variables.

External Variables:

The energy market is one of the sectors most affected by fluctuations in international politics, which directly impact energy security in Southeast Asia. This was evident during the Russia–Ukraine war, which exposed European countries to an unprecedented energy supply crisis due to sanctions on Russia, thereby increasing demand for alternative energy sources.

ASEAN countries are not far removed from similar risks. Potential flashpoints include the Taiwan issue, tensions involving North Korea, the US–China rivalry in the region, and the strategic ambitions of the Indian subcontinent. In addition, disputes over the South China Sea—particularly regarding maritime security routes such as the Strait of Malacca, and territorial disagreements over the Spratly Islands (an archipelago of small, uninhabited coral islands spread across approximately 425,000 square kilometres of sea and rich in oil and gas resources)—further complicate the picture.

All these dynamics are compounded by the ASEAN Charter, which discourages interference in the internal affairs of member states. This limits the bloc’s ability to adopt a unified position on international political and military conflicts that affect energy security. Consequently, ASEAN countries are unlikely to exert meaningful pressure to halt the current war against Iran, despite their reliance on oil imports from the Middle East.

Internal Variables:

As noted earlier, ASEAN economies recorded an average GDP growth rate of 4% between 2023 and 2024, reflecting rapid economic expansion, urbanisation, and the rise of a growing middle class, alongside a population of approximately 683 million. This has led to increased consumption of fossil fuels.

ASEAN imports approximately 92% of its crude oil, and around half of its natural gas requirements. Meanwhile, regional oil production declined by 0.51%, while oil consumption rose by 4.19% and gas consumption by 4.56% in 2023.

Local production remains insufficient to meet demand. According to ASEAN statistics (2020), daily oil production stood at:

Indonesia: 998,642 barrels

Malaysia: 708,783 barrels

Vietnam: 343,584 barrels

Thailand: 343,575 barrels

Brunei: 24,741 barrels

Philippines: 24,842 barrels

Myanmar: 22,226 barrels

This deficit forces ASEAN countries to rely heavily on imports—particularly from the Middle East—making their energy security highly vulnerable to disruptions such as the ongoing war against Iran. Any disruption to supply routes, especially through the Strait of Hormuz, exacerbates the situation. The longer the conflict persists, the greater the impact on ASEAN’s energy security.

Electricity Generation and Energy Dependence:

Electricity production is among the most affected sectors. Oil plays a crucial role in power generation, particularly in archipelagic countries such as Indonesia and the Philippines, where oil-fired plants (diesel or fuel oil) are essential for supplying electricity to remote islands beyond the reach of national grids.

Natural gas also plays a critical transitional role, especially in countries such as Malaysia, Thailand, Singapore, and Myanmar, due to its flexibility in complementing intermittent renewable energy sources. However, limitations on domestic supply in countries like Malaysia and Vietnam have increased reliance on liquefied natural gas (LNG) imports, exposing these economies to global price volatility—further intensified by instability in the Middle East.

Alternative Solutions for Energy Stability:

Amid these challenges, solar photovoltaic energy emerges as a key solution for Southeast Asia, offering several strategic advantages:

Abundant resources: The region receives high solar radiation (4–6 kWh/m²/day), making it one of the most suitable areas globally for solar energy generation.

Rapid cost decline: The levelised cost of electricity (LCOE) for solar has dropped significantly, making it cheaper than new coal and gas plants in many parts of Southeast Asia.

Fast deployment: Solar projects, particularly distributed rooftop systems, can be deployed quickly to address energy shortages during crises.

However, large-scale adoption of renewable energy requires substantial investment and advanced technology, much of which is currently provided by China.

Regional Efforts to Enhance Energy Security:

ASEAN countries have taken steps to mitigate energy volatility, including:

Building strategic oil reserves to ensure supply during crises.

Expanding the use of natural gas as a transitional fuel.

Diversifying energy sources through cross-border investments by Asian companies.

Managing regional disputes over offshore resources—particularly in the Spratly Islands and the South China Sea—to avoid escalation.

Responding to the War’s Impact:

As the rotating chair of ASEAN, the Philippines convened a special meeting of ASEAN foreign ministers on 13 March 2026 to discuss the growing security crisis in the Middle East and its implications for regional economic stability, energy security, and the safety of ASEAN citizens abroad.

The meeting called on all parties to respect international law, including the UN Charter, in order to maintain peace and stability. However, it failed to reach a consensus on coordinated measures regarding oil-exporting countries.

National-Level Responses:

Individual ASEAN countries have adopted various measures to cope with the energy crisis:

Philippines: Reduced official travel and introduced a four-day work week in some government departments.

Thailand: Implemented remote working policies to reduce energy consumption.

Vietnam: Encouraged businesses to adopt remote work and urged citizens to carpool or use bicycles.

Indonesia: Increased fuel subsidies to offset rising prices.

Malaysia: Raised fuel prices and is considering reducing working days or expanding remote work policies.

In conclusion, the war against Iran has exposed the structural vulnerabilities of ASEAN’s energy systems. While the region continues to pursue diversification and renewable energy solutions, its heavy dependence on external energy sources—particularly from the Middle East—remains a defining challenge for its long-term energy security.

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