The onset of May has seen the war in West Asia persist for almost two months. On February 28, 2026, the US and Israel led a collaborative air strike on Iran. This was followed by Iran’s retaliatory drone and missile attacks on American bases in Qatar, Bahrain and Kuwait, plunging the region into conflict. In the following weeks, the conflict escalated as Israel struck Hezbollah in Lebanon and Iran attacked Saudi Arabia, the United Arab Emirates (UAE) and Qatar’s oil and gas reserves, in retaliation for Israel’s attacks on the South Pars gas field in March. This led to disruptions in these countries’ oil and liquefied natural gas (LNG) exports, thereby expanding the conflict’s global impact. As a result, oil prices have surged to their highest level since 2022. In mid-April, Brent oil prices were more than 50% higher than at the start of the war. The World Bank Group has predicted energy prices to surge by 24%, the highest since 2022, following the Russian invasion of Ukraine. Additionally, shipping disruption in the Strait of Hormuz, which controls an estimated 35% of global seaborne crude oil trade, has further deepened the economic crisis by affecting energy and other essential supplies.
The effects of this war have been global, and thus Southeast Asian countries are no exception. The prevailing perception that the war is limited by geography was dispelled on March 4, 2026. A torpedo launched by a US submarine sank the Iranian ship IRIS Dena near Sri Lanka (west of Galle), killing more than 83 people on board. This incident brought the West Asian conflict close to the neighbourhood and had a broader impact across Southeast Asian countries, given the US military’s strategic presence in the Philippines, Singapore and Thailand. There was rising fear of retaliation, which could have been devastating. Although this fear proved far-fetched, it does not eliminate the economic and financial impact of this war on this region.
According to the Southeast Asia Energy Outlook 2024, the region relies on West Asia for 60% of its oil imports. Thus, since February, rising energy costs and disruptions to maritime trade have affected even day-to-day livelihoods in Southeast Asian countries. This region is among the highest rice-producing areas, but it has been significantly affected by the scarcity of urea and other essential fertilisers, which has impacted not only rice but also other agricultural produce. Industrial production is reeling amid shortages of essentials such as helium, required for semiconductors and electronics; naphtha for steel, aluminium, and bromine; and petroleum, which is essential to the textile industry.
{{/usCountry}}According to the Southeast Asia Energy Outlook 2024, the region relies on West Asia for 60% of its oil imports. Thus, since February, rising energy costs and disruptions to maritime trade have affected even day-to-day livelihoods in Southeast Asian countries. This region is among the highest rice-producing areas, but it has been significantly affected by the scarcity of urea and other essential fertilisers, which has impacted not only rice but also other agricultural produce. Industrial production is reeling amid shortages of essentials such as helium, required for semiconductors and electronics; naphtha for steel, aluminium, and bromine; and petroleum, which is essential to the textile industry.
{{/usCountry}}On May 1, 2026, Singapore’s Prime Minister, Lawrence Wong, warned that the conflict's escalation would further impact the country and hamper not only energy and food but also essential daily-use commodities. In mid-April, the government provided aid, including $ 1 billion in support packages for industries reeling from energy costs, and introduced Community Development Council (CDC) vouchers for households. These initiatives have become essential, given that the raw material supplies have affected the supply chain. In March, Singapore Refining Co (SRC), the Singapore petrochemical firm PCS, and Aster Chemicals and Energy declared force majeure on shipments, further affecting the global market.
Similarly, Thailand’s Thai petrochemical firm Rayong Olefins, part of Siam Cement Group, has also declared force majeure. Thailand’s distressed economy, burdened by high debt and with recovering tourism and export industries, has plunged deeper into problems due to this war, as it is overdependent on LNG for power generation (approximately 66%). The tourism industry is also adversely affected. Thailand is heavily dependent on this industry and is still recovering from post-pandemic impacts. The ongoing war’s impact on air travel has hampered tourism not only in Thailand but also in other countries' tourism sectors. In Vietnam, the war has brought the country's agricultural sector, especially rice production, and the construction industry to a standstill due to shortages of materials and fertiliser. Similarly, in the Philippines, the economic crisis is escalating. In early March, President Marcos Jr. had to order the release of the ₱ 5,000 fuel subsidy for public vehicle drivers. The situation in Malaysia and Indonesia also reflects the same. Compared to these countries, some Southeast Asian countries, such as Myanmar, Cambodia and Laos, are not directly affected, as they depend on other Southeast Asian countries, especially Singapore, Malaysia and Thailand, for energy resources. For Myanmar, it has been a respite for the current government and military, as the war in the West has shifted global attention away from the internal conflict and the questionable 2025-2026 election, on the basis of which a new military-led government was formed.
The war has brought to the fore the vulnerabilities of this region, namely over-reliance on the Gulf's energy resources and a lack of regional coordination in the event of an emergency. Compared with regional organisations such as BRICS, ASEAN's response or recovery initiative as a region has been unsatisfactory. This scenario should be seen as a wake-up call for the region.
(The views expressed are personal)
This article is authored by Aparupa Bhattacherjee, researcher, South and Southeast Asian countries, West Bengal.