Iran War Leaves Asia Reluctant to Remain Energy Hostage

The war in Iran is beginning to cause major shocks to Asian economies, particularly for nations heavily reliant on energy imports from the Gulf region. The surge in oil and gas prices has forced many Asian governments to deploy massive subsidies to maintain stable energy prices. However, behind this crisis, a significant shift in regional energy strategy is emerging, ranging from supplier diversification to the strengthening of cooperation between Asian nations.

Energy crises are beginning to disrupt both economies and food supplies. Several Asian countries are facing heavy pressure due to the spike in energy prices, the effects of which are also being felt in the food sector. The price of urea fertiliser, much of which is produced in the Gulf region, has risen by approximately 50% since the war began. The increase in the cost of fertiliser and diesel has led many rice farmers in Asia to reduce their planting plans. Dr Alisher Mirzabaev from the International Rice Research Institute warned that this crisis is no longer merely a matter of farmer profitability, but has the potential to evolve into a threat to food security if the conflict continues.

Asian industries are under pressure, and governments are beginning to face fiscal deficits. The surge in energy prices is also hitting Asia’s manufacturing sector. This pressure has forced governments to disburse large amounts in subsidies. India is reported to be spending around US$150 million per day to keep fuel prices stable, while Indonesia is spending approximately US$60 million per day on energy subsidies. However, analysts warn that such policies are difficult to sustain in the long term. Asian governments now face a major dilemma between maintaining fiscal stability or avoiding social unrest caused by rising energy and food prices.

Asia is seeking a way out, with China potentially benefiting. The energy crisis caused by the Iran war is prompting Asian nations, including ASEAN members, to alter their energy strategies. At the 48th ASEAN Summit held in Cebu a few weeks ago, Southeast Asian leaders discussed the formation of shared fuel reserves to strengthen regional energy security. Meanwhile, the Asian Development Bank has pledged to disburse US$50 billion through 2035 to support the integration of power grids between countries across Asia.