IEA Warns Southeast Asia Must Strengthen Energy Security As Middle East Crisis Exposes Import Risks

A new report from the International Energy Agency (IEA) has warned that Southeast Asia faces growing energy security challenges as disruptions to oil and gas supplies through the Strait of Hormuz expose long-standing vulnerabilities in the region’s energy system. The report argues that while governments are taking steps to manage the immediate crisis, stronger policy action and deeper regional cooperation will be essential to ensure long-term energy security as energy demand continues to rise rapidly.

The findings are outlined in the 2026 edition of the Southeast Asia Energy Outlook, which examines energy trends and future projections across the 11 member countries of the Association of Southeast Asian Nations. The report arrives at a time when energy security has become a top priority for governments across the region following the conflict in the Middle East and its impact on global energy markets.

According to the IEA, Southeast Asia remains highly exposed to disruptions in Middle Eastern energy supplies. Around 60% of the region’s crude oil imports originate from the Middle East, while nearly half of the refined oil products consumed across Southeast Asia are derived from Middle Eastern crude. As a result, the severe disruption of energy shipments through the Strait of Hormuz has created significant challenges for countries throughout the region, affecting fuel supplies, petrochemical feedstocks, chemical products, and liquefied petroleum gas (LPG), which remains an important cooking fuel for millions of households.

Governments have responded with a range of short-term measures aimed at reducing energy consumption and easing pressure on fuel supplies. These include encouraging remote work, promoting greater use of public transportation, and implementing emergency demand-management initiatives. However, the report argues that these actions alone will not address the deeper structural weaknesses that the current crisis has exposed.

The IEA projects that Southeast Asia’s energy import bill will reach approximately $160 billion this year. If current policy trajectories remain unchanged, that figure could increase significantly in the coming decades, potentially reaching $400 billion by the middle of the century. Such a scenario would represent around 5% of the region’s total economic output, highlighting the growing financial burden associated with energy imports.Speaking on the report’s findings, Fatih Birol said Southeast Asia is becoming one of the most important regions shaping global energy demand.

Over the next decade, the region is expected to account for around 20% of global energy demand growth, second only to India. He noted that the current crisis has revealed weaknesses in the region’s energy system that require urgent attention.The report identifies diversification as one of the most important strategies for improving energy security. Reducing dependence on imported fuels through a broader mix of energy sources, technologies, electrification, and efficiency improvements could help strengthen resilience against future supply disruptions.

The IEA also emphasised the importance of stronger regional cooperation, particularly as countries work to balance energy security, affordability, and sustainability objectives.A growing preference for domestic energy resources is already beginning to emerge across the region, although the available options vary from country to country. Some nations may seek to increase the development of domestic oil and gas reserves to reduce reliance on imports.

However, the report suggests that a larger share of future investment is likely to flow into renewable energy projects.Renewable energy deployment is already accelerating under existing policy frameworks. The report forecasts that renewable power capacity across Southeast Asia will nearly triple within the next decade. Solar energy, in particular, is gaining momentum.

The Philippines has become one of the fastest-growing solar markets in the region, emerging as the second-largest destination for Chinese solar exports during the first quarter of 2026. Imports were approximately three times higher than those recorded during the same period a year earlier, highlighting growing investment activity in the sector.Coal is also expected to remain a significant part of the region’s energy mix in the near term.

The renewed focus on energy security could lead some countries to maintain or even strengthen support for coal-fired power generation as they seek reliable domestic energy sources. At the same time, interest in nuclear energy continues to grow across several Southeast Asian nations as governments explore longer-term options for diversifying electricity generation. However, the report notes that nuclear power’s future role will depend on reducing construction timelines and accelerating project deployment.

Electricity is becoming increasingly central to Southeast Asia’s energy future. Power demand is already expanding at roughly twice the rate of overall energy consumption and is expected to continue rising sharply through 2050. According to the report, electricity demand over the next decade alone will increase by an amount equivalent to Japan’s entire current electricity generation capacity.Several factors are driving this rapid growth.

Expanding populations, rising incomes, industrial development, and increasing demand for cooling are all contributing to higher electricity consumption. The region’s stock of residential air conditioners is projected to triple by 2035, reflecting both economic growth and rising temperatures. Electric vehicle adoption is also accelerating, with one in five vehicles sold in Southeast Asia now being electric.

Governments are increasingly viewing EVs as a way to reduce fuel import dependence, and additional policy support for electric mobility is beginning to emerge in response to the current energy crisis.Against this backdrop, the IEA identifies energy efficiency as one of the most cost-effective solutions available to policymakers. Improving efficiency across buildings, transport systems, and industrial operations could help reduce energy demand growth, lower import dependence, and strengthen resilience during periods of market disruption.

The report also highlights the significant benefits that could be achieved through greater regional cooperation. One of the most prominent examples is the ASEAN Power Grid initiative, which aims to improve electricity connectivity between countries. Enhanced regional power trading could reduce costs, improve system reliability, and strengthen energy security by allowing countries to share resources more effectively.

The IEA also points to opportunities for closer collaboration on oil security measures and industrial development strategies, arguing that coordinated action could help countries build on their respective strengths while addressing common challenges.As Southeast Asia continues its rapid economic and population growth, the report concludes that energy security will remain one of the defining challenges for the region.

While immediate measures can help manage the current crisis, long-term resilience will require substantial investments, diversified energy systems, stronger efficiency measures, and deeper regional cooperation to meet rising demand while reducing exposure to external shocks.