PHNOM PENH, March 26 — The unfolding crisis in West Asia has starkly exposed South-east Asia’s fragile, import-dependent energy architecture that is increasingly leaving Asean economies vulnerable to geopolitical shocks.
The simmering tensions around the Strait of Hormuz and the wider Persian Gulf, and the subsequent ballooning of oil and gas prices and crippling of supply chains are jolting fuel markets in the Asean region.
Governments are in a reactive policy mode. The Philippines’ move on Tuesday to declare a national energy emergency underscores how distant geopolitical tensions can upend energy security at home.
Experts are urging Asean policymakers to realign their energy policies.
“Asean countries absolutely need to take coherent and intentional policy action to build energy and economic security and avoid such dependence on imported fuels.
“In the near term, steps to minimise the effect of the fallout on the vulnerable and the poorer sections of the society will likely be needed. However, subsidising inefficient and expensive fuel use in general is not the long-term answer,” Singapore-based Ramnath N Iyer, Sustainable Finance Lead of Asia at the Institute for Energy Economics and Financial Analysis, told Bernama.
Energy is crucial to drive South-east Asia’s diverse and rapidly growing economies that support 670 million people.
Almost 50 per cent of the region’s crude imports arrive from West Asia via the under-threat Strait of Hormuz. Although not the safest sea route, it is an economical one, experts say.
South-east Asia has become highly reliant on West Asia’s supplies because of ageing oil fields in the region, shorter import route, refinery limitations, and cheaper high-sulphur or “sour” crude.
A joint offensive by the United States (US) and Israel on Iran on February 28 has rendered the fossil fuel market highly volatile.
West Asia’s oil and gas fields, once considered the safest and trusted suppliers to global economy, are now under scrutiny.
Importers are now paying about US$100 (RM395) per barrel of crude oil or the “black gold,” which could easily escalate domestic energy production costs and eventually stall growth rates.
“The disruption has already seen very sharp increases in the price of oil and gas. There are also reports of fuel shortages in many countries in the region.
“Therefore, in the near term, a negative impact on economic growth is almost inevitable. The bigger question is how deep the impact is, which is directly dependent on both the duration of disruption and the extent to which an individual economy has left itself dependent on imported oil and gas,” said Ramnath.
Heavily oil-reliant economies from Thailand to the Philippines and export-driven Cambodia and Laos are facing the brunt of the fuel fiasco.
The Philippines, with over 100 million people, imports more than 90 per cent of its oil from the Gulf states. Measures such as promoting electric vehicles, shortening school days, and lowering office building air conditioning temperatures have been adopted to curb fuel consumption.
Dinita Setyawati, Senior Energy Analyst for Asia for Jakarta-based global think tank Ember, said a spike in fossil fuel prices will have a cascading effect on inflation, fuel rationing, and energy subsidies.
“Policymakers should immediately pivot to homegrown renewable energy and leverage regional cooperation in the Asean grid to enable greater sharing of renewable energy resources across the region.
“In emerging economies of Asean, the impact could extend far beyond energy prices into a struggle to secure fuel supplies. Disruption could also be translated into a loss of electricity access with broader economic and social consequences,” Dinita told Bernama.
In its March report, Ember warned that prolonged high energy prices could intensify competition for supply, favouring wealthier economies while deepening global disparities.
“A prolonged Middle East situation risks amplifying socioeconomic pressures, widening income disparities not only between countries but also within them, as higher energy costs filter through to households and industries,” it said. — Bernama
Malay Mail – Money
