Blog by Maythiwan Kiatgrajai, Senior Energy Advisor, CASE for Southeast Asia
When the Middle East conflict escalated into an open war on 28 February 2026, the subsequent blockade of the Strait of Hormuz on 4 March sent immediate shockwaves through the global energy market. For the CASE countries—Thailand, Indonesia, the Philippines, and Vietnam—this represented an existential threat, as one-fifth of global oil and gas supplies normally pass through this chokepoint and Southeast Asian countries import around 56% of their crude oil from the Middle East. The impact was felt instantly: global Brent crude prices experienced a record-breaking 59% surge within a single month, climbing past 115 USD per barrel by late March, a rise steeper than the increase seen during the 1990 Gulf War.
This supply blackout and the skyrocketing price of fossil fuels have forced governments to prioritise supply security through domestic reserves, stockpiling, and fuel diversification. Around 25% of Indonesia’s crude oil import pass through Hormuz while the in-country reserve can last for 20 days. The government is diversifying their imports from other regions such as Africa and the US. The Philippines imports 98% of its crude oil from the Middle East, though its finished products are primarily sourced from Asian neighbours. Lacking a Strategic Petroleum Reserve (SPR), the country relies entirely on commercial stocks. In response to the situation, the government is now procuring 2 million barrels of oil to serve as a state-owned buffer. In Thailand, where 59% of crude oil and 28% of LNG imports are vulnerable to the blockade, the government has increased spot market LNG purchases for power generation, expanded refinery capacity, and restricted finished petroleum exports. Vietnam imports over 80% of its crude oil from Kuwait, leaving it heavily exposed. Consequently, the government is considering a halt on crude oil exports and the acceleration of its E10 (10% ethanol mixed with gasoline) blending program.
Key observations
Security First, Environment After—Temporary Return to Carbon-Intensive Fuels
CASE governments have temporarily shifted from long-term decarbonisation to short-term survival, prioritising energy security over their climate commitments. This tactical retreat from climate goals is evidenced by emergency regulatory rollbacks aimed at maintaining grid stability and transport mobility. For instance, the Philippines has authorized the temporary use of lower-grade, higher-emission Euro II fuels to stretch existing stocks and lower costs for specific groups of consumers including vehicles manufactured in 2015 or earlier, traditional buses, power plants, generators, and the maritime and shipping sectors.
Coal seems to be the primary intermediate solution for substituting heavily exposed LNG and crude oil imports using for power generation in CASE countries. Vietnam, Thailand, and the Philippines have either restarting decommissioning or operating their coal-fired power plants at their maximum capacity to offset the loss of imported fuels. The switch to higher-polluted coal can also be observed in other Asian countries such as Japan and South Korea where the operational restrictions of coal power plants have been lifted and India where coal usage has expanded to household cooking to substitute for imported gas. These emergency measures underscore a difficult regional reality: while the long-term vision remains a green transition, governments are currently forced to treat carbon-intensive fuels as the essential bedrock of national stability.
Energy-Saving Interventions and Subsidy Dilemma—Long Term Sustainability
In addition to supply-side interventions, CASE governments are implementing aggressive energy-saving mandates noting that demand-side interventions can mitigate the volatile gas and oil imports and increase energy security of the countries. Along with other regions in Asia, all CASE countries have adopted Work-from-home (WFH) policies to immediately reduce transportation fuel consumption. Indonesia, for example, estimated that one day of online work can cut national fuel use by up to 20%. Other Asian nations including South Korea and Myanmar have applied more intensive fuel-reduction measures, such as “License plate rationing system” which allows passenger cars (excluding electric and hydrogen vehicles) on roads only on alternative days. This measure can immediately reduce national petrol consumption by 50%.
To reduce electricity consumption, Thailand, Philippines, and some other Asian countries have mandated that government and public buildings adjust air conditioning to certain degree. However, no other mandatory measure has been observed in CASE countries beyond voluntary public campaigns promoting behavioural changes, such as switching off appliances when not in use. In contrast, South Korea has implemented more tangible energy-saving measures, such as “Shorten your shower” campaigns to lower the gas and electricity demand for water heating and encouraging the use of washing machines and vacuum cleaners only on weekend. By prioritizing such proactive measures, CASE countries can shift their energy policy from reactive crisis management toward building long-term resilience against global price volatility.
While energy saving measures can directly cut electricity and transportation demand and can be implemented cost efficiently without additional investment required, certain interventions—such as electricity tariff freezes in Indonesia and Vietnam (and under consideration in Thailand) or fuel price caps (used in Vietnam and Thailand in early phase of crisis)— may inadvertently hinder conservation. By not allowing prices to reflect actual costs, these policies diminish the incentive for consumers to reduce usage, even though they stem from governments’ good intention of mitigating economic impacts on households.
The key is not to avoid these interventions entirely but to implement them cautiously; electricity tariffs or fuel prices should maintain household wellbeing and affordability while remaining high enough to encourage energy saving. Alternatively, governments could move from blanket subsidies to targeted support for vulnerable groups to reduce the state budget burden. For instance, Thailand topped up state welfare cards with an additional 100 THB (3.07 USD) which can be used for fuel and is considering keeping tariffs low only for households consuming 200–300 kWh per month. Similarly, the Philippines has offered 5,000 pesos (83 USD) to motorcycle taxi and public transport drivers, alongside free bus rides for students and workers in selected cities.
Reducing Gas and Oil Dependency—More Promising Greener Future for Transport and Power
The challenge of relying on Middle Eastern oil and gas has acted as a powerful catalyst for accelerating the transition toward cleaner alternatives, such as biofuels, electric vehicles (EVs), and renewable energy (RE). To ensure a sufficient fuel supply for road transport, CASE countries are actively stimulating biofuel adoption. Indonesia is considering increasing the share of palm oil-based biodiesel in its fuel mix to 50% (B50), up from the current 40% while Thailand has decided to promote B20 by subsidizing it to be 5 THB (0.15 USD) per litre cheaper than standard diesel. Vietnam has also accelerated its E10 roll-out from April 2026, two months ahead of the original schedule, targeting a 10% reduction in gasoline consumption.
In addition to biofuel, EVs represent a vital alternative for decarbonizing the transport sector. Their independence from gasoline and diesel makes EVs one of the most economically feasible options both during and after the crisis, especially as fossil fuel prices are predicted to remain high for months. However, EV usage does not always guarantee a clean solution as its impact depends heavily on the carbon intensity of the generation mix. For Southeast Asia, the share of RE and hydropower is projected to reach around 30% of generation mix in 2026 under the Baseline Scenario. Therefore, EVs may not be a purely green option at this stage.
Consequently, promoting EVs should be done in parallel with decarbonising the power sector which includes increasing RE share in the generation, integrating battery energy storage systems, and accelerating grid modernization. Vietnam has already approved the list of over 80 key energy projects including offshore wind, hydropower, and infrastructure expansions to support RE industrial development together with accelerating the adoption of EVs, the expansion of charging infrastructure, and incentives for EV production and use. In Thailand, amid the current cabinet setup, the government is considering the launch of a direct power purchase agreement mechanism and the revitalisation of the net billing program for residential rooftop solar. These dual efforts in transport and power generation decarbonisation demonstrate that while the path to energy security is complex, the integration of domestic renewable resources remains the viable defence against global price shocks.
This blog has been sourced from the official website of CASE for Southeast Asia and can be accessed here. It has been slightly edited.
