Written by: Liam Spitz
The ongoing military conflict between the US, Israel, and Iran has strained the global energy supply to unprecedented levels.
Both the destruction of oil and gas refineries and the closure of the Strait of Hormuz, one of the world’s most vital shipping lanes, are leaving governments around the world scrambling to combat rising fuel prices. As 90% of those energy exports are destined for the Asian markets, Southeast Asian governments are in an increasingly precarious position.
Facing this challenge, both EU and ASEAN Member States are putting forward solutions to keep their economies afloat. While some countries opt for state intervention in markets to ensure a continuous supply of energy, others lean towards reducing demand to maintain prices.
While the EU has come up with a coordinated response, ASEAN has yet to come to a common position, cognisant of the difference in impact among
EU’s response so far
European countries are experiencing a similar strain on their economy as a result of the conflict. Though only around 20% of its energy supply is sourced through the Hormuz Strait, gas prices have skyrocketed.
Coordinating between member states, it is employing a combination of supply security measures, policy action, and targeted economic support. These include the release of fuel reserves, temporary adjustments to the Emission Trading Scheme (ETS), tax cuts, and targeted support for households. EU leaders stressed the need for further diversification of energy supply and a faster green transition. Under the banner of the AccelerateEU initiative, the European Commission is paving the way to carbon zero through higher electrification goals, increased facilitation of investment into clean energy, as well as more flexible short-term measures to support consumers and enterprises.
Singapore
Singapore, though facing considerable pressure given its reliance on imported energy, has been surprisingly resilient, with multiple lines of defense against energy supply shocks in place. have so far curbed the need for drastic emergency measures, although increase in petrol and electricity prices are expected in the horizon.
Most of Singapore’s energy use is from natural gas, and as a major importer of LNG from Qatar, the conflict has cut off this viable source for the past month. However, its gas imports are supplemented by pipelines from Indonesia and Malaysia, which will enable sufficient supply for domestic use. However, one if its main industries, petrochemicals, will be severely impacted by the lack of input and higher cost. Singapore has oil refineries capable of processing over 1.5 million barrels a day, which is then exported to neighbouring countries.
Nonetheless, the Singaporean government has delayed the implementation of an air travel levy to reduce stress on enterprises and urged consumers to be more frugal.
Manpower and Energy minister Dr See Leng Tan has stressed the need to find new partners in securing energy supply and to double down on renewables. So far, deals with Australia and Japan have been struck to coordinate energy policy and purchasing.
Indonesia
Indonesia is prioritising price stability through strong government intervention. Authorities have stated that subsidised fuel prices will not be increased in the near term, with the state budget absorbing rising global costs. To manage fiscal pressure, the government is pursuing spending cuts and energy-saving measures, including encouraging remote work in parts of the public sector and promoting reduced fuel consumption.
Indonesia’s exposure to Gulf supply disruptions is moderate compared to several ASEAN peers, with around a fifth of crude imports and a higher share of gas imports coming from the region. However, limited fuel reserves, estimated at roughly four weeks of consumption, remain a structural vulnerability.
Subsidies and price controls have kept domestic fuel price increases among the lowest in Southeast Asia, helping avoid widespread shortages or long queues. However, cost pressures are building, particularly in transport, where airlines are seeking fuel surcharges and fare cap adjustments as jet fuel prices rise.
Malaysia
Malaysia is relying on targeted fuel subsidies to stabilise domestic prices, while maintaining that fuel supply remains sufficient. Rising global oil prices have significantly increased subsidy costs, placing growing pressure on government finances, though authorities have committed to keeping fuel prices stable in the near term.
The government’s primary focus is on preserving subsidies for eligible groups while tightening enforcement and targeting. Financial support schemes for key sectors remain in place, alongside measures to curb misuse, including restrictions on subsidised fuel sales to foreign-registered vehicles, limits on bulk purchases, and stricter monitoring of petrol stations.
Armizan Mohd Ali, Minister of Domestic Trade and Living Costs, has confirmed that there are no major nationwide shortages of petrol, diesel, or LPG, attributing isolated disruptions to short-term logistical delays rather than systemic supply failures.
Philippines
The Philippines is amongst those hit hardest by the energy crisis, sourcing around 98% of its oil from the Middle East. President Marcos declared a state of national emergency on 24 March, forming a task force to coordinate the effective management of fuel and other essential goods. The country is trying to curb both demand and secure supply in order to ease stress on consumers and businesses.
In an effort to reduce demand, offices have switched to four-day work weeks, and air travel has been reduced. Further, the government has started implementing subsidies and releasing oil reserves. To secure the supply of energy, the Philippine government has started buying Russian gas after a five-year hiatus, following US President Trump’s temporary dismissal of sanctions.
Thailand
Thailand relies on a hybrid approach combining market-based pricing with active government intervention. Central to this strategy is the use of energy price stabilization funds, which are deployed to smooth price increases and ensure gradual adjustments rather than sudden spikes that could disrupt consumers and businesses. To provide alternative sources of energy, the government has ordered coal power plants to operate at full capacity.
Concurrently, the government has introduced demand-side measures, urging companies and citizens to conserve energy. In addition, Thailand has taken supply-control measures, implementing a ban on oil exports except for Laos and Cambodia.
Vietnam
Vietnam is pursuing a fiscally driven and market-oriented response, while retaining state oversight. The government is preparing to activate its Fuel Price Stabilization Fund to cushion sharp price increases if needed, alongside cutting import tariffs on a wide range of fuel products to 0% to ease supply constraints and reduce domestic price pressures.
The country has also established a national energy security task force to coordinate policy responses and mitigate the impact of rising fuel costs on households and businesses. Importantly, Vietnam benefits from a structural advantage: its domestic refining capacity can meet roughly 75% of fuel demand, providing greater resilience against global supply shocks compared to more import-dependent economies.
Timor Leste
Timor-Leste, less exposed than many ASEAN countries to immediate supply disruptions, is maintaining a market-based pricing system. The government has prioritised ensuring supply stability while limiting the economic impact of rising fuel costs.
Authorities have confirmed that fuel stocks remain sufficient for the coming months, supported by coordination with suppliers and access to emergency reserves from neighbouring Indonesia if needed. Prime Minister Xanana Gusmão has specifically pledged that fuel prices are not expected to increase, and the government has signalled readiness to intervene should prices rise sharply.
Alongside supply measures, officials have encouraged reduced fuel consumption, including limiting non-essential travel, as part of efforts to preserve reserves and manage demand.
Laos
Laos, highly dependent on imported petroleum products, has launched a comprehensive suite of emergency measures, following a price surge of nearly 50 percent in under a week and widespread shortages across the country. The government’s immediate priority is to stabilise domestic availability while limiting the economic and social impact of rising prices.
In response, authorities have introduced a range of demand-and supply-side measures, including fuel-saving policies such as remote work and rotating work shifts, alongside excise tax cuts and the use of oil fund resources to moderate prices. A special committee has also been appointed to manage the crisis. To ease the burden on residents, a mobile fuel service was also launched in Vientiane, and free bus services introduced in Champasak province.
At the same time, Laos is working to secure fuel through imports from multiple suppliers, having moved to diversify beyond its near-total dependence on Thailand, which had initially suspended fuel exports at the onset of the crisis.
Myanmar
Myanmar’s government is responding to severe fuel shortages with emergency measures, including strict rationing and demand-reduction policies.
To manage short-term fuel availability, the military government introduced a licence-plate-based odd-even system for private vehicles. Additionally, a QR-code fuel rationing system has been implemented at petrol stations nationwide, to verify purchases, enforce daily limits, and reduce long queues. At the same time, imports of new petrol and diesel vehicles have been restricted, while tax incentives support electric vehicle adoption as part of longer-term energy diversification.
Furthermore, Myanmar’s fuel supply is also affected by regional factors. Thailand has reduced fuel and electricity exports to some border towns, prompting cross-border travel for refueling and contributing to local supply pressure. The fuel shortage has also affected domestic aviation, with some flights temporarily suspended due to limited jet fuel.
Cambodia
Cambodia has recorded the highest petrol price increase of nearly 68%. In response, the government’s short-term strategy is to stabilise domestic fuel supply and limit further price shocks through import diversification, subsidies, targeted tax measures, and regulatory oversight.
The government has reduced import duties and value‑added tax (VAT) on gasoline and diesel to zero and cut special excise taxes in order to stabilize retail prices as global benchmarks rise. Retail petrol prices have been revised in recent weeks, reflecting both market trends and these tax adjustments. Additionally, a subsidy of around 6.5 cents per litre remains in place to cushion the impact on households.
Cambodia remains fully dependent on imported fuel, with Singapore and Malaysia increasing shipments to compensate for recent export restrictions from Vietnam and China and Thailand. Nearly a third of petrol stations briefly closed due to uncertainty earlier this month, though closures have since fallen to a small share as supply has partially stabilised.
Brunei
Brunei has maintained a relatively stable position in response to the energy crisis, with authorities confirming that domestic fuel supply remains secure and no major shortages reported nationwide. As a net exporter of oil and natural gas, Brunei faces little immediate risk of supply disruption.
Brunei has not introduced major demand-side restrictions or emergency measures. Its immediate focus remains on maintaining supply stability rather than active market intervention.
ASEAN
Next to the reactions of individual countries, ASEAN put forward a combined response to the growing oil crisis. In an emergency meeting of foreign and economic ministers, spokespersons urged a halt to hostilities in the Gulf and for stronger Southeast Asian coordination in tackling energy prices. A big emphasis was set on making supply chains more resilient and accelerating the transition to renewable energy sources.
Conclusion/Recommendations
A common threat identified by all parties is the stronger need to develop renewable energy sources. This second shock to energy supply within five years – following the Russian attack on Ukraine – has made painfully obvious that a switch away from fossil fuels is not only a matter of sustainability, but of geopolitics.
In this context, the current crisis presents an opportunity to deepen cooperation between the European Union and ASEAN on energy security. Such cooperation could support the development of ASEAN countries as future energy suppliers, including through investments in LNG infrastructure, renewable energy production, wind power, and electric vehicle battery supply chains. Further, the two economic blocs could use their combined purchasing power in the acquisition of energy resources, making it easier to regulate fair prices. Such measures would strengthen the energy safety net for all involved and signify a new era of Eurasian coordination.
