Southeast Asia Faces Record $160 Billion Energy Import Bill After Hormuz Disruption
The IEA warns Southeast Asia's energy costs could reach $400 billion by mid-century; Hormuz exposure and gas shortages are already derailing power sector plans.
Global clean energy capital expenditures reached $74 billion in the first half of 2026 and are tracking toward a record $180 billion by year-end, fintech firm Crux said in its 2026 mid-year clean energy finance report published Saturday (2026-08-22). Southeast Asia, still absorbing the cost of a Middle East supply shock, has largely sat out that investment cycle.8
The International Energy Agency projects the region's energy import bill will reach $160 billion in 2026, with potential to climb to $400 billion by mid-century under current policy settings, roughly 5% of the region's combined GDP. The Iran conflict moved those projections into immediate fiscal reality.2
The Strait of Hormuz closure cost Asia around 15 million barrels per day in lost supply, former IEA chief Nobuo Tanaka said at a hydrogen industry event in Malaysia during the week of June 8 (2026-06-08). About 60% of Asian crude imports originate in the Middle East, Kpler data cited by Reuters showed, with the average daily import rate running at 14.74 million barrels last year.1
The chokepoint concentration is extreme. Around 84% of crude shipped through Hormuz is destined for Asian buyers, while China sourced nearly 50% of its oil imports through that waterway alone before disruptions began, according to The Asset. Iraq absorbed the sharpest production blow: output fell from over 4 million barrels per day to just 1.4 million. The Iraqi oil minister reported in May that the country exported just 10 million barrels in April, down from 93 million barrels before the US-Israeli military campaign against Iran began.5,1
ICE Brent crude front-month stood at $93.60 a barrel early Sunday (2026-08-23), well below the March 9 (2026-03-09) intraday peak of $119, the highest since the 2022 energy crisis, but still elevated against the levels Asia's importers faced before Hormuz became contested.5
The IEA formally described the Iran conflict as a "wake-up call" for Southeast Asia's power sector in a report circulated in mid-June (2026-06-16), citing the region's dependence on imports from a narrow set of suppliers. The Middle East supplies around 60% of Southeast Asia's crude oil imports, and nearly half the oil products consumed or refined in the region derive from that source. Shortages of liquefied petroleum gas for cooking and petrochemical feedstocks spread rapidly, compounding the pain for industrial users.3,4,2
Indonesia responded by sharpening policy focus on solar alongside selective gas development, WoodMac said. The shift came after gas shortages and high prices had already disrupted the country's domestic power buildout, with decarbonisation timelines at risk as fossil fuel costs climbed.7
The demand picture complicates any quick fix. The IEA projects Southeast Asia's stock of air conditioners will grow from roughly 50 million units in 2020 to around 300 million by 2040, a near-sixfold increase that points to sustained electricity demand growth regardless of how that power is generated. Data centres accounted for around 1.5% of global electricity demand in 2024 and the IEA expects their share to remain below 3% by 2030, even with accelerated AI adoption.5
Tanaka's prescription is electrification. "Thanks to electric vehicles, solar power, artificial intelligence and data centres, the age of electricity is here," he said, noting rising EV demand across Asian markets. China dominates battery, EV and solar panel supply chains, while Vietnam and Indonesia are beginning to produce wind turbine components and solar panels, Asian Power reported. But the pace varies sharply across ASEAN economies.1,6
Southeast Asia is set to account for 20% of global energy demand growth, the IEA projects. Iraq's production, still running at around 1.4 million barrels per day, roughly a third of its pre-war output, has not recovered. Any fresh escalation at Hormuz would hit Asian buyers immediately, with no buffer to absorb the shock.2,1