BANGKOK — A newly released report from the International Energy Agency is sounding the alarm for Southeast Asia, warning that the war in Iran has laid bare serious vulnerabilities in the region’s energy supply chain — ones that could cost hundreds of billions of dollars if left unaddressed.
The report, released Tuesday, found that Southeast Asia’s heavy dependence on oil and gas shipped through the Strait of Hormuz made the region especially susceptible to disruptions caused by the Iran conflict. The IEA described the situation as a “stark wake-up call” for regional energy security.
IEA Executive Director Fatih Birol emphasized the urgency of the situation. “Diversification of energy sources and supply routes is now a central priority,” he said.
The report warns that if significant reforms are not made, Southeast Asia’s energy import bill could balloon to $245 billion by 2035 — nearly triple the $80 billion figure recorded in 2024.
The energy disruption has already sent shockwaves through the region, triggering higher energy bills and fueling inflation. The IEA also noted that the crisis has reinforced a reliance on coal during periods of energy shortage — a likely setback for efforts to move away from fossil fuels.
Despite the challenges, the conflict appears to be accelerating some positive shifts. The report points to record sales of electric vehicles, growing interest in nuclear energy, and a surge in rooftop solar installations and other renewable energy projects across the region.
Sam Reynolds of the U.S.-based Institute for Energy Economics and Financial Analysis offered his assessment of the findings. “The IEA report clearly highlights that Southeast Asia is at a crossroads,” he said.
In the Philippines, where a national energy emergency was declared, consumers have been turning to rooftop solar in record numbers as a fast, self-directed way to cope with rising utility costs. “This is the first time I’ve seen a demand shock of this magnitude,” said Ivan Cano with the Manila-based solar company EcoSolutions.
The IEA found that the Philippines became the second-largest destination for Chinese solar exports in the first quarter of 2026, with imports running approximately three times higher than the same period the previous year.
The transportation sector is also seeing significant change. Electric vehicle sales across Southeast Asia more than doubled in 2025, reaching roughly half a million units. The IEA noted that one in every five cars sold in the region is now electric.
In a dramatic policy move last month, Laos banned the importation of fuel-powered vehicles for the remainder of 2026 in an effort to reduce oil imports and accelerate the transition to electric vehicles.
Nuclear energy plans are also advancing in the region, though construction timelines and regulatory hurdles remain significant obstacles. Indonesia, Vietnam, and the Philippines are considered to be among the furthest along in developing nuclear power programs, though their schedules remain uncertain.
Reynolds noted that even with a tentative deal to end the Iran war on the table, fossil fuel prices are expected to stay elevated, meaning “we will see a push towards more ambitious clean energy deployment.”
To address its vulnerabilities over the long term, the IEA recommends that Southeast Asia work to reduce its overall dependence on imported fossil fuels. The agency suggests improving the efficiency of national power grids and increasing investment across all forms of renewable energy, including solar, wind, hydroelectric, and geothermal power.
The report concluded: “The Middle East conflict is both a stress test of Southeast Asia’s current energy system and a catalyst to accelerate structural change.”
