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Hormuz Crisis Exposes Southeast Asia's Energy Vulnerabilities, IEA Says

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Southeast Asia must accelerate efforts to diversify its energy supplies and strengthen regional cooperation after disruptions in the Strait of Hormuz exposed deep vulnerabilities in the region's energy system, the International Energy Agency said on Tuesday.

The IEA said in its 2026 Southeast Asia Energy Outlook that the Middle East conflict and the near shutdown of energy shipments through the strategic waterway have underscored the risks facing one of the world's fastest-growing energy markets.

The region relies heavily on Middle Eastern crude, with about 60% of its oil imports originating from the Gulf.

The IEA said that half of the oil products refined or consumed across Southeast Asia are derived from Middle Eastern crude, leaving economies vulnerable to supply disruptions and price shocks.

The agency said the ongoing conflict has already triggered shortages of petrochemical feedstocks, chemical products and liquefied petroleum gas used by millions of households for cooking.

Though governments have responded with emergency measures to reduce demand, including encouraging remote work, the IEA said policymakers must look beyond short-term fixes and address structural weaknesses in Southeast Asia's energy system.

"Southeast Asia is a crucial region shaping global energy trends and set to account for 20% of the growth in the world's energy demand over the next decade, second only to India", said Fatih Birol, IEA executive director.

He added that the energy crisis has exposed structural weaknesses in Southeast Asia's energy sector that need to be addressed rapidly and robustly.

The IEA forecasts that Southeast Asia's energy import bill will reach $160 billion this year, and could climb to $400 billion by mid-century under current policy settings, equivalent to about 5% of regional economic output.

The agency points to diversification as a key strategy, with countries increasingly turning to domestic energy resources and renewable power. Renewable generation capacity is projected to nearly triple within the next decade under existing policies, while solar deployment is showing signs of accelerating.

The 2026 Southeast Asia Energy Outlook report shows that the Philippines emerged as the second-largest destination for Chinese solar exports during the first quarter of 2026, with imports about three times higher than a year ago.

Coal is also expected to receive renewed support as governments prioritize energy security. However, the IEA said that nuclear power is gaining attention as a longer-term option despite concerns over costs and lengthy construction timelines.

Electricity is expected to play a key role in Southeast Asia's energy transition. Power demand is set to grow at twice the pace of overall energy consumption and is projected to rise through 2050 as populations expand, economies industrialize and demand for cooling increases.

The stock of residential air conditioners across Southeast Asia is also set to triple by 2035, while electric vehicle adoption is accelerating.

The IEA said one in five cars sold in the region is now electric, with governments considering additional incentives to reduce dependence on imported fuels.

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