The prospect of disruption across a critical maritime chokepoint matters far beyond the battlefield. For North East India and for the wider Indian economy energy security is a supply-chain issue that eventually shows up in transport costs, household inflation, industrial output, and government budgets. When the Strait of Hormuz is closed, the shock does not stay in the Persian Gulf; it ripples through Asia s fuel markets within days, forcing governments to improvise under pressure.
Why the Strait of Hormuz shutdown hits Asia hardest
In 2024, 84% of the crude oil and 83% of the LNG transported through the Strait was destined for Asian markets. That concentration matters because most ASEAN countries are net energy importers, meaning they depend on steady external inflows and have limited buffers. The situation is worsened by low stock levels across the region: most members hold reserves sufficient for less than 30 days.
There are exceptions in reserve days, but even the higher figures do not neutralize a prolonged shock. The Philippines holds about 45 days, Thailand has a nominal 106-day figure, Japan has 254 days, South Korea 208 days, and China 120 days. The gap highlights a core vulnerability: Asia s ability to absorb disruptions varies sharply, and ASEAN s cushion is generally thinner.
The economic impacts are already visible in the form of double-digit fuel price rises at pumps, ballooning budget deficits tied to fuel subsidies, collapsing industrial supply chains, currency depreciation, and significantly downgraded GDP forecasts. In plain terms: when energy becomes scarce or expensive, every sector that relies on it manufacturing, logistics, power generation, and food distribution faces immediate cost pressure.
ASEAN s uneven vulnerability: from Manila to Kuala Lumpur
ASEAN s exposure is not uniform. The Philippines, Vietnam, Indonesia, Malaysia, Thailand, and Singapore illustrate how geography, import dependence, refining capacity, and policy tools shape the severity of the crisis.
Philippines: fastest political escalation and steep growth hit
The Philippines was described as the hardest-hit economy in the bloc. With 98% of its oil imported from the Middle East, Manila responded quickly and publicly. Diesel prices reached 130 Philippine pesos per litre, while gasoline rose above 100 pesos. President Ferdinand Marcos Jr. declared a state of energy emergency under Decree No. 110, and launched the government s UPLIFT programme.
The fiscal and macroeconomic pressure followed. The IMF downgraded the Philippines 2026 economic growth forecast from 5.6% to 4.1%, one of the sharpest revisions in Asia. For a country where energy costs spill into food, transport, and household spending, the signal is that the shock is not temporary in its effect.
Vietnam: near-total reliance on Middle East supply
Vietnam faces structural vulnerability. Approximately 85% of its oil imports originate in the Middle East, with virtually all coming from a single source: Kuwait. Despite tax relief measures, pump prices rose by about 19%. Fuel queues and panic buying became a daily occurrence.
MUFG Research warned that if Brent crude stays around $120 per barrel, Vietnam s GDP growth could drop by over one percentage point, potentially falling below 7%. It also projected the USD/VND exchange rate could exceed 27,000. Hanoi has announced plans to source four million barrels from suppliers outside the Middle East, but that volume equals roughly six days of consumption an example of how emergency diversification can be too small to change the overall arithmetic quickly.
Indonesia: producer status still doesn t prevent imports
Indonesia is a producer, yet it imports over a third of its oil. For 2026, its fuel subsidy budget was set at IDR 381.3 trillion ($22.3 billion), based on an oil price of $70 per barrel and an exchange rate of IDR 16,500. Both assumptions are now outdated. Jakarta introduced fuel purchase limits through the digital MyPertamina QR system, capping consumption at 200 litres per vehicle per day while keeping subsidised prices unchanged.
Malaysia and Thailand: subsidy arithmetic turns into fiscal stress
Malaysia, the only net energy exporter in ASEAN, still faces difficulties. Thirty-eight percent of its oil flows through the Strait of Malacca, and it imports refined products. The cost of capping RON95 gasoline at RM1.99 per litre became immense: monthly subsidies increased from RM700 million before the crisis to RM7 billion in April, with an annual projected subsidy cost of RM58.4 billion compared to RM15 billion originally budgeted.
Thailand, a regional refining hub, saw its Oil Fuel Fund shift from a surplus of 2.5 billion THB on March 1 to a deficit of 62.4 billion THB by April 26 a change of nearly 2 billion USD in eight weeks. Such fund swings indicate that even refining economies are not insulated when global price shocks meet domestic price controls.
Singapore and smaller economies: quiet impact, disruptive shortages
Singapore felt the impact despite being less visibly dramatic. In 2025, gas accounted for 93.1% of the fuel mix, so the shock manifested differently, but the overall exposure remains. Smaller ASEAN members also reported disruptions: in Laos, fuel queues formed in Vientiane; Myanmar implemented an alternating-day driving system; Cambodia is almost entirely dependent on imports from Thailand, which restricted supplies.
How governments responded and why demand control was not enough
The policy response across ASEAN reveals a spectrum from immediate demand suppression to rationing and heavy subsidy intervention. The earliest measures aimed to reduce consumption by changing routines. The Philippines introduced a four-day workweek for government offices. Indonesia allowed civil servants to work from home one day a week. Thailand asked citizens to ditch their jackets to reduce reliance on air conditioning. Vietnam urged remote work to cut transport demand. Malaysia cancelled government-sponsored Hari Raya open houses, restricted official overseas travel, and discussed work-from-home. Myanmar brought in alternating driving days.
Once demand control reached its limits, countries turned to direct rationing. Indonesia implemented the 200-litre limit. Thailand imposed a ban on export of refined products with some exceptions, launched investigations into alleged oil stockpiling and resale in its southern part, and targeted cross-border resale pressures. Laos, Cambodia, and Myanmar leaned on queues as a rationing mechanism.
Almost every government also used extraordinary price interventions, paying a fiscal price. Vietnam suspended environmental taxes and VAT on gasoline and diesel and drew on its Fuel Stabilisation Fund, which holds only 15 30 days of reserves. Indonesia s subsidy budget for 2026 was built on assumptions that are far below current market realities. Thailand s Oil Fuel Fund moved from surplus to deep deficit. Malaysia s subsidy costs are roughly 10 times pre-crisis levels, forcing it toward subsidy elimination for higher-income earners a policy debated for a decade but avoided until the crisis left less room to maneuver.
This pattern matters for the North East too. In India s neighbourhood, energy cost shocks can amplify cross-border price pressure on fuel, shipping-related charges, and logistics expenses. Even where direct imports differ, the regional fuel-and-transit environment influences domestic costs through market expectations and supply chain timing.
The structural lesson: ASEAN lacks the reserves and mechanisms to absorb shocks
Analysts point to a structural flaw exposed by the crisis: the near-total absence of substantial strategic oil reserves across the region. Without shared buffers or enforcement capability, ASEAN s response capacity remains reactive rather than resilient.
The Philippines proposed raising statutory oil stockpiles from 15 to 30 days and LPG reserves from 7 to 21. Yet even Malaysia despite being a producer lacks formal strategic reserves. Thailand s largest nominal reserve figure of 106 days still translates into stocks sufficient for just 38 days. Vietnam s reserves are estimated at less than 20 days. Indonesia has launched energy projects worth IDR 116 trillion, but large projects do not help with immediate disruptions.
The supply-side pivot is also becoming more visible. There is a growing shift toward Russia as a strategic supplier. Indonesian President Prabowo s recent four-country tour (Japan, South Korea, Russia, and France) reflected this approach: agreements worth USD23.6 billion were concluded in Japan, Seoul s bilateral relations moved into a comprehensive strategic partnership, and the Moscow leg produced long-term agreements for crude oil and LPG supply with Russia proposing an increase to Indonesian markets. Vietnam and Malaysia are considering importing Russian crude oil following easing of US sanctions.
Diplomacy is joining the energy calculus. Malaysia s Anwar established direct contact with Tehran, speaking to President Masoud Pezeshkian for safe passage of seven tankers. The messaging emphasized humanitarian solidarity while linking diplomatic relations with energy security. The Philippines too established direct contact with Tehran.
ASEAN coordination: from rhetoric to operational steps
Coordination at bloc level has historically relied on rhetoric, with limited operational solidarity. This time, ASEAN is reactivating the long-dormant 2009 ASEAN Petroleum Security Agreement, promoting the ASEAN Power Grid project, and discussing joint procurement of oil from sources outside the Middle East. Efforts to achieve a 45% share of renewable energy by 2030 are being accelerated.
Yet the constraints remain. ASEAN s non-interference norms and consensus-based decision-making can slow decisive action during emergencies. There is no collective stock-release mechanism equivalent to the IEA s, no shared reserves, and no enforcement capabilities comparable to stronger frameworks. Whether ASEAN uses the crisis as a window for durable reform or simply patches damage and reverts to dependency once the Strait reopens will shape energy security for years possibly a generation.
For India, including North East India where connectivity, trade corridors, and power demand are closely tied to broader economic stability, the lesson is clear: energy risk is regional and systemic. As ASEAN experiments with new suppliers and new coordination models, India s policy planners and industry stakeholders will likely watch how diversification, reserve strategies, and supply contracts evolve.
In the months ahead, the real test will not be the speed of short-term measures work pattern changes, rationing, subsidies but whether countries build measurable resilience: formal strategic reserves, transparent market stabilisation tools, and practical coordination that can function under pressure. When the next disruption comes, the region s ability to absorb shocks will depend on reforms started now.