Energy security versus geopolitics: ASEAN states face tough choices over Iran’s Strait of Hormuz passage

analysis Asia

Energy security versus geopolitics: ASEAN states face tough choices over Iran’s Strait of Hormuz passage

While Iran’s selective approach to allowing access to the Strait of Hormuz could push more countries to the negotiating table, the bigger issue is having to engage on Tehran’s terms rather than on the basis of a purely commercial right of passage, analysts say.

KUALA LUMPUR: More Asian countries dependent on energy imports could enter talks with Iran on allowing their ships safe passage in the crucial Strait of Hormuz if the Middle East conflict drags on, analysts say.

But these countries would also have to weigh securing their energy supplies against the optics of accepting Tehran’s politicisation of the strait, possibly paying a toll fee and angering the United States, the analysts told CNA.

Iran said it has allowed several countries’ ships to cross the Strait of Hormuz since its forces effectively slowed traffic through the narrow sea lane to a trickle during the war, which began in late February.

The list comprises largely Asian states and includes China, India, Pakistan, Japan, Thailand and Malaysia.

In deciding the list, Iran assesses whether a country is directly hostile or supportive of the US-Israel position in the conflict, say observers.

Malaysia, for instance, likely got the nod because of its traditional position as a moderate Muslim country, combined with its longstanding and generally consistent engagement with Tehran, they add.

Observers added that Tehran’s selective approach might push other members of the Association of Southeast Asian Nations (ASEAN) facing domestic fuel shortages - like the Philippines and Vietnam - to negotiate for access in the Strait of Hormuz.

“It is likely that more Asian and ASEAN states will explore similar arrangements, especially energy-import dependent economies. However, how Iran responds will depend on its broader strategic calculations, so outcomes will vary,” said Ilango Karuppannan, a retired Malaysian diplomat with more than three decades of experience in the foreign service.

“Iran is likely to assess countries based on their political alignment and strategic posture. States seen as closely aligned with the US, or hosting US military facilities, may face greater difficulty, while more neutral countries may have better prospects.”

The closure of the Strait of Hormuz has disrupted fuel supplies and pushed up prices across the region. The strait, which connects the Persian Gulf to the Indian Ocean, handles about a quarter of the world’s seaborne oil trade, with roughly 80 per cent of these shipments bound for Asia.

The Philippines, for instance, has declared a national state of energy emergency, while Vietnam has temporarily waived an environmental tax on fuel to cut soaring petrol prices.

CRITICAL WATERWAY

Since Mar 2, the total number of ships that passed through the Strait of Hormuz has been roughly equal to what the critical waterway used to see in just a day, according to an analysis by maritime information service Lloyd’s List published on Mar 25.

A total of 142 vessels have transited since the start of March, but 67 per cent of that traffic has a direct affiliation with Iran either through trade or ownership, Lloyd’s List said. The remaining trickle of non-Iranian ships is made up primarily of Greece-owned or affiliated vessels (15 per cent) and Chinese vessels (10 per cent).

Since Mar 13, a total of 26 vessel transits through the strait have followed a modified route in Iranian territorial waters and pre-approved under a “toll booth” system that requires ship operators to submit to a vetting scheme, the report said, without breaking down the ships by flag or affiliation.

“While not all ships are paying a direct toll, at least two vessels have and the payment is settled in (Chinese) yuan,” the report added.

Bloomberg reported on Mar 24 that payments of as much as US$2 million per voyage were being sought on an adhoc basis, something that Iran denies.

Countries like Pakistan, India, China and Malaysia have reported their ships being allowed to sail through the Strait of Hormuz. India and Malaysia have said their ships would be granted toll-free access.

Earlier in March, a Thai bulk carrier travelling in the waterway was attacked, although Bangkok said on Mar 28 it had reached an agreement with Tehran to allow access to Thai oil vessels.

Safe passage in the strait has become a persistent issue in the Middle East conflict, with analysts saying the disruption to global supply chains will be felt long after the route is reopened and ships have been cleared to pass en masse.

US President Donald Trump has indicated a willingness to end the US military campaign against Iran even if the Strait of Hormuz remains largely closed, the Wall Street Journal reported on Mar 31, even as Tehran pushes on with plans to introduce a formal toll system for ships transiting the strait, a move Washington has publicly condemned.

The conflict has also exposed how vulnerable ASEAN is to sudden shocks and disruptions, with the bloc’s trade, energy as well as agriculture and food security resilience set to be hit for months and even years, experts told CNA, stressing a need to diversify supply sources and routes.

Even then, doubts linger over alternative sea routes like the Red Sea, with the Iran-backed Houthis recently joining the conflict and launching attacks against Israel.

“There may be alternative routes or bypass options, but their feasibility, capacity and cost-effectiveness are still uncertain, especially if disruption is prolonged,” said Joanne Lin, coordinator of the ASEAN Studies Centre at Singapore’s ISEAS-Yusof Ishak Institute.

“The more realistic lesson for ASEAN might be to diversify suppliers where possible, strengthen strategic reserves, improve contingency planning and accelerate renewables and energy transition efforts, so that the region is less vulnerable to shocks linked to a single maritime chokepoint.”

GETTING THE HORMU