The crisis in the Strait of Hormuz since early March 2026 has shaken the global energy market. Within days, world oil prices surged to nearly US$120 per barrel, while liquefied natural gas (LNG) prices in Asia recorded their biggest jump since 2023.
The conflict has also damaged, shut down, or disrupted 13 oil and gas facilities across the Middle East as of early March. The most severe immediate impact has been felt in Southeast Asia, as most countries in the region rely heavily on imported energy. Meanwhile, other parts of Asia, including East and South Asia, have also experienced significant price pressures.
Immediate Impact on Southeast Asia
The Strait of Hormuz is a vital route for around 20 percent of global oil and LNG trade. Security disruptions in the area have effectively led to a de facto closure, as many tanker ships are reluctant to pass through the strait.
This situation has directly strained Southeast Asia’s energy security, which is highly dependent on imports from the Persian Gulf. The Philippines imports about 96 percent of its oil needs from the region, followed by Vietnam at 87 percent and Thailand at 74 percent.
This dependence has forced governments to take drastic measures. Thailand, which imports nearly 80 percent of its oil and more than a quarter of its LNG from the Middle East, has used the Oil Fuel Fund mechanism to stabilize prices. The Philippines has even introduced a four-day workweek policy to reduce energy consumption and ease economic pressure.
Indonesia is also facing significant fiscal pressure. Oil consumption reaches around 1.2 million barrels per day, far exceeding domestic production of about 608,000 barrels. As a result, energy subsidies in 2025 ballooned to more than Rp300 trillion.
Malaysia is in a difficult position as well. As an oil exporter, the country benefits from higher revenues, but it still faces risks if global LNG supply is disrupted.
The crisis is also affecting mainland Southeast Asia. In Myanmar, long lines at gas stations and restrictions on vehicle use have begun to appear. Laos and Cambodia are facing similar pressures due to their dependence on fuel supplies from neighboring countries.
Renewable Energy Opportunities in Southeast Asia
The crisis has also highlighted Southeast Asia’s vast renewable energy potential. The region has an estimated total potential of around 17,217 GW, dominated by solar power at 15,592 GW—enough to meet energy demand 40 to 50 times greater than current consumption.
Indonesia stands as a major hub for clean energy, with a technical potential of 3,687 GW. Most of this comes from solar power (3,294 GW), followed by wind (155 GW) and hydropower (95 GW). However, only about 0.3 percent of this potential has been utilized so far, far below the national energy mix target of 17–18 percent for 2024–2025.
Vietnam leads in offshore wind potential, with an estimated 470 GW along its 3,260 km coastline, although its installed capacity currently stands at only around 20 GW. The Philippines stands out in geothermal energy and floating solar power, targeting an additional 52.9 GW of capacity by 2034.
Thailand has focused on maximizing biomass and battery energy storage systems, with solar capacity surging by 92.5 percent in 2025 to reach 6.5 GW. Meanwhile, Malaysia has prioritized rooftop solar panels and aims to achieve a 31 percent renewable energy share by the end of 2025, supported by more than 82,000 operational systems.
With a combination of solar, wind, geothermal, and biomass resources, Southeast Asia actually has significant flexibility to reduce its dependence on imported fossil fuels while strengthening long-term energy security.
