Disruptions in the Strait of Hormuz have exposed critical structural risks in Southeast Asia’s energy sector, according to the International Energy Agency (IEA). The region faces a rising energy import bill that could reach $400 billion by mid-century as energy demand grows, requiring rapid diversification and stronger regional cooperation to maintain affordability and security.
Why is the Middle East critical to Southeast Asian energy?
The region’s reliance on Middle Eastern oil creates significant vulnerability to geopolitical instability. The Middle East currently accounts for 60% of crude oil imports for Southeast Asian nations. Additionally, nearly half of all oil products refined or consumed across the region originate from Middle Eastern crude.
The IEA’s 2026 Southeast Asia Energy Outlook reports that virtual shutdowns of shipments through the Strait of Hormuz have already caused tangible shortages. These disruptions affect the availability of liquefied petroleum gas (LPG) used for household cooking, as well as essential petrochemical feedstocks and chemical products.
To manage immediate fallout, several governments have implemented emergency measures. These include policies to curb demand by encouraging remote work and increasing the use of public transportation.
Southeast Asia is set to account for 20% of the world’s energy demand growth over the next decade, making it the second-fastest-growing region after India.
How much will the regional energy import bill grow?
Current policy settings suggest a massive financial burden is approaching. Southeast Asia’s energy import bill is projected to hit $160 billion this year. Without significant changes to energy sourcing and efficiency, this figure could climb to $400 billion by mid-century.
This projected cost would represent approximately 5% of the region’s total economy. IEA Executive Director Fatih Birol noted that the current energy crisis has exposed structural weaknesses that require rapid and robust solutions.
“Diversification of energy sources and supply routes is now a central priority,” Birol stated. He identified electrification, efficiency, and the deployment of various fuel technologies as the primary levers to reduce this import exposure.
What is driving the surge in electricity demand?
Electricity demand in Southeast Asia is currently growing twice as fast as overall energy use. The IEA projects that electricity demand will increase by an amount equivalent to Japan’s current total electricity generation within the next decade alone.
Several specific factors are driving this trend:
- Population and Economic Growth: Expanding economies are fueling light industries and rising household needs.
- Cooling Requirements: As temperatures rise, the stock of residential air conditioners in the region is expected to triple by 2035.
- Electric Vehicle (EV) Adoption: One in five cars sold in Southeast Asia is now electric, a trend supported by increasing policy incentives.
How are countries diversifying their energy mix?
While some nations may look to develop untapped domestic oil and gas, the IEA sees investment shifting toward other sectors. Renewable energy capacity is on track to nearly triple within ten years under current policies.
Solar power is seeing significant momentum. For example, the Philippines became the second-largest destination for Chinese solar exports in the first quarter of 2026, with import volumes roughly three times higher than the same period in 2025.
Other emerging trends include:
- Coal: The sector may receive renewed support as governments prioritize immediate energy security.
- Nuclear Power: Several countries are exploring nuclear energy as a long-term diversification tool, though success depends on reducing long construction timelines.
How can regional cooperation improve security?
The IEA emphasizes that individual national actions are not enough. A coordinated regional response can address both electricity and oil security. The ASEAN Power Grid project is cited as a primary example of how shared infrastructure can deliver stability.
Greater dialogue between nations can also help countries build on their respective industrial strengths. The IEA, which opened its first Regional Cooperation Centre in Singapore last year, continues to assist these nations in balancing energy security with sustainability and affordability.
Frequently Asked Questions
High dependency on Middle Eastern oil—which provides 60% of the region’s crude imports—makes the region vulnerable to disruptions in the Strait of Hormuz.
The energy import bill could rise to $400 billion, or roughly 5% of the region’s economy, by mid-century.
Growth is driven by expanding populations, industrialization, a massive increase in air conditioning use, and the rise of electric vehicles.
What do you think is the most effective way for Southeast Asian nations to secure their energy future? Share your thoughts in the comments below or subscribe to our newsletter for more energy industry analysis.
