IEA Warns Southeast Asia of Energy Vulnerabilities Amid Iran War

The International Energy Agency released its 2026 Southeast Asia Energy Outlook warning that the war in Iran and the virtual shutdown of shipments through the Strait of Hormuz have exposed critical structural vulnerabilities in the region's energy sector. Because the Middle East provides 60% of Southeast Asia's crude oil imports, the crisis has caused shortages of petrochemical feedstocks and liquefied petroleum gas, while driving up inflation and energy bills.

Financial projections indicate a significant surge in costs, with energy import bills expected to reach $160 billion this year. The agency warns that without accelerated diversification, import costs could triple to $245 billion by 2035 or potentially reach $400 billion by mid-century.

National governments have responded with both emergency and long-term measures. The Philippines declared a national energy emergency, leading to record rooftop solar adoption, while Laos banned fuel-powered vehicle imports for the remainder of 2026. Vietnam is pursuing nuclear energy following a March 2026 agreement with Russia to build its first two reactors. Regionally, member states are coordinating the ASEAN Power Grid project to enhance electricity security. These shifts are accompanied by a surge in electric vehicle sales and renewed interest in nuclear power across Indonesia and Vietnam.