IEA Warns Southeast Asia's Energy Import Costs Could Triple by 2035
The IEA projects Southeast Asia's energy import costs will triple to $245 billion by 2035 as the Hormuz closure exposed the region's narrow supply options.
ICE Brent front-month crude was trading at $83.70 a barrel on Monday (2026-08-03), roughly $35 below the March 9 (2026-03-09) peak of $119, the highest level since the 2022 energy crisis, as markets partially absorbed the supply shock from Iran's closure of the Strait of Hormuz. The retreat in price has not reduced Asia's underlying exposure to the routes through which most of its oil flows.5
With 84% of crude shipments through Hormuz destined for Asian markets, and China sourcing close to half its oil imports through that single passage, the region bore the cost of the disruption more directly than any other. Former IEA chief Nobuo Tanaka put it plainly at a hydrogen industry event in Malaysia in the week of June 8 (2026-06-08): "Now we are facing a third oil shock, and Asia is at the centre of it."5,1
The numbers bear that out. Around 60% of overall Asian crude oil imports originate from the Middle East, a figure that translated into an average daily import rate of 14.74 million barrels last year, according to Kpler data cited by Reuters in March. Hormuz's closure cost the region an estimated 15 million barrels of daily supply at its peak, according to Tanaka.1
Iraq absorbed the sharpest blow. Production there plunged from more than 4 million barrels a day to just 1.4 million — with April exports collapsing to 10 million barrels from 93 million the month before the conflict began, according to the Iraqi oil minister's report in May.1
The IEA's report released on Tuesday (2026-06-16) spells out what sustained exposure to that kind of disruption would cost Southeast Asia specifically. The region's energy import bill could reach $160 billion this year, rising to $245 billion by 2035, triple the $80 billion spent in 2024, if policy settings remain unchanged. Under a worst-case trajectory extending to mid-century, that figure could reach $400 billion, equivalent to around 5% of the region's economy.3,2
The supply mix explains why those numbers are so sensitive to disruption. The Middle East supplies roughly 60% of Southeast Asia's crude oil imports, and close to half the oil products refined or consumed across the region are derived from Middle East crude. The Hormuz closure triggered shortages of liquefied petroleum gas for cooking alongside disruptions to petrochemical feedstocks and chemical products, according to the IEA.2
"Diversification of energy sources and supply routes is now a central priority," IEA executive director Fatih Birol said when the report was published. The agency's own projections suggest demand pressure will intensify: the region's stock of air conditioners is expected to grow from roughly 50 million units in 2020 to around 300 million by 2040, a structural increase in electricity and cooling demand with no easy domestic supply base to draw on.3,5
The shock has accelerated at least one visible demand shift. EV sales across Southeast Asia more than doubled in 2025 to around half a million units, with one in five cars sold regionally now electric, according to IEA data. Tanaka pointed to electrification broadly — solar, EVs and the AI-driven rise of data centres — as the region's structural path away from oil dependence.3,1
But for gas-fired power operators, the relief in oil prices since March has not arrived clean. Most Asian LNG is contracted on oil-linked terms, meaning cost increases baked in during the March spike work through to generation margins over months rather than days, and take-or-pay provisions limit operators' ability to cut output even as margins compress. JKM spot was trading at $21.25 per MMBtu on Monday (2026-08-03).4
Southeast Asia is projected to account for 20% of global energy demand growth under current trajectories. How quickly governments translate the IEA's diversification call into procurement decisions and supply agreements will set the floor on how exposed the region remains when the next disruption tests the Hormuz corridor.2