The Iran war has exposed Southeast Asia’s vulnerability to energy supply shocks, with the region’s energy import bill projected to triple to $245 billion by 2035 from $80 billion in 2024, according to an International Energy Agency (IEA) report released Tuesday. The conflict highlighted the risks of heavy reliance on oil and gas transported through the Strait of Hormuz, prompting urgent calls for diversification of energy sources and supply routes.
The IEA report detailed how the energy shock triggered by the Iran war forced Southeast Asia into a state of energy triage, causing higher energy costs and inflation. While the conflict accelerated sales of electric vehicles, interest in nuclear power, and growth in rooftop solar and renewables, the report emphasized that more comprehensive reforms are necessary. Fatih Birol, IEA executive director, stressed that diversification is now a central priority for the region’s energy security.
The report noted that the war has reinforced dependence on coal during energy crises, potentially slowing efforts to phase out fossil fuels. Nuclear power plans are advancing in countries like Indonesia, Vietnam, and the Philippines, but these projects face lengthy construction and regulatory hurdles. The IEA’s findings underscore the broader challenge Southeast Asia faces in balancing energy security with clean energy transitions amid geopolitical tensions.
The IEA’s report was published on June 16, 2026, providing detailed projections and policy recommendations to Southeast Asian governments. It highlights that without swift diversification, the region’s energy import costs could severely impact economic stability over the next decade.