Southeast Asia, home to some 700 million people, is running out of energy. The region sources the vast majority of its oil and liquefied natural gas through the Strait of Hormuz, and with that waterway now entering its fourth week of closure, the consequences have moved from economic inconvenience to national emergency.
The Philippines, which imports 90% of its oil from the Middle East, was first to break. President Ferdinand Marcos Jr. declared a national energy emergency on Tuesday, authorising fuel rationing, cutting fuel taxes, and mandating a four-day work week for government offices. Fuel prices at Manila pumps have doubled since late February. Queues at petrol stations stretch for hours. Hospitals have been placed on emergency generator protocols.
Vietnam: Grounded
Vietnam is facing a jet fuel crisis that threatens to ground a significant portion of its aviation industry. The country normally sources much of its jet fuel from China and Thailand, but both nations have begun restricting exports to protect their own domestic supplies. Vietnam Airlines has announced the cancellation of dozens of domestic routes starting in April, citing an inability to secure adequate fuel supplies at any price.
The aviation disruption cascades through the economy. Vietnam's tourism sector, which accounts for roughly 10% of GDP, depends on domestic air connectivity to move visitors between Hanoi, Ho Chi Minh City, Da Nang, and resort destinations. Without flights, the hotels empty. Without hotels, the restaurants close. Without restaurants, the supply chains contract. One disrupted strait, ten thousand kilometres away, is dismantling an entire economic ecosystem.
Thailand: The Tourism Collapse
Thailand's government this week sharply reduced fuel subsidies that had been imposed at the beginning of the war, leading to an immediate spike in prices at the pump. The decision was driven by fiscal necessity — the subsidies were costing the government billions of baht per week — but the timing could not be worse. The Songkran holiday, Thailand's most important cultural festival and a peak period for international tourism, is weeks away.
Long-haul flights that avoid Middle Eastern airspace are more expensive and less frequent. Hotel bookings for Songkran are down 40% compared to last year. The tourism industry, which contributes roughly 20% of Thailand's GDP, is facing its worst crisis since the pandemic.
The Fertiliser Factor
Beyond fuel, the blockade is threatening food security. The Persian Gulf states are major producers of fertiliser, manufactured from natural gas and shipped through the Strait of Hormuz. Southeast Asian agriculture depends heavily on these imports. Rice production in the Philippines, Vietnam, and Thailand — three of the world's largest rice exporters — could be significantly affected if fertiliser supplies do not resume before the next planting season.
The cascading effects are difficult to overstate. Energy scarcity drives up transport costs. Transport costs drive up food prices. Food prices drive up inflation. Inflation erodes purchasing power. Eroded purchasing power reduces consumption. Reduced consumption contracts the economy. Each link in the chain tightens the next.
No Relief in Sight
The countries of Southeast Asia have limited leverage over the situation. They are not parties to the conflict. They have no military assets in the region. Their diplomatic influence in Tehran and Washington is modest at best. They are, in the truest sense, collateral damage — 700 million people paying the price for a war they did not start, in a strait they cannot reopen, over a dispute they cannot resolve.