I Geo-Economics & Chokepoints Asia-Pacific

ASEAN after the Gulf crisis: from oil security to grid security

Institution: ISEAS – Yusof Ishak Institute (Fulcrum)
Author: Kaho Yu and Jinseok Sung
Country · language: Singapore · English
Affiliation: Government-aligned research institute

Summary

The authors note that the Gulf crisis has exposed ASEAN's dependence on the Middle East: the Philippines sources 95 per cent of its oil imports and Vietnam 49 per cent of its gas imports from the region. Electricity demand in the region rose 60 per cent between 2015 and 2025 and is expected to grow by 4 per cent a year until 2035.

Over 2025–2040, grid expansion requires investment of more than 300 billion dollars, and ASEAN Power Grid interconnections around 27 billion dollars. Cross-border interconnection capacity stood at 7.7 GW as of 2025 and needs to double by 2040. According to the authors, electrification reduces fuel price volatility but introduces four new risks in its place: the exposure of infrastructure to geopolitical and climate threats, dependence on clean technology and battery minerals, the difficulty of coordinating multilateral trade in electricity that cannot be stored, and cyber threats. Their recommendations are regional grid governance and cyber security, resilience-first financing, supply chain cooperation and joint emergency mechanisms.

Blind spot

What the West misses: analyses that read the Hormuz crisis through the oil price fail to see that Asia is responding with electrification and regional grids, and that this creates a new dependence on China's clean technology supply chain. Weakness of this reading: political obstacles such as Myanmar and sovereignty sensitivities are not addressed.

Talay assessment

Bottom line

The authors' diagnosis is sound: electrification reduces fuel price volatility while shifting risk to grid infrastructure, battery minerals and the cyber domain. However, the proposed transformation rests on an investment timetable stretching to 2040 and exceeding 300 billion dollars, whereas the actual response to the Hormuz shock so far has been national oil and LNG stockpiles. Political obstacles such as Myanmar and sovereignty sensitivities will slow multilateral electricity trade. The most likely path is gradual progress through bilateral and sub-regional links rather than joint governance, with stockpiling policies taking priority during the crisis.

Likely effects

Asian stockpiling policiesUncertainWeeks
In the near term public resources are flowing into stockbuilding: the Philippines is prioritising a 60-day state reserve and Japan its POWERR Asia programme. This competes for the same budgets as grid investment.
Clean-tech dependence on ChinaNegative6 months+
Electrification cuts oil dependence but creates a new dependence on China-centred supply chains for batteries, renewable equipment and grid components, affecting ASEAN's bargaining power.
Grid financePositive6 months+
The need for more than 300 billion dollars in grid investment by 2040, and about 27 billion dollars for the ASEAN Power Grid, opens wide scope for development banks and resilience-focused public finance.
CybersecurityNegative1–6 months
As cross-border connections grow, digital control systems create new attack surfaces; a breach in one country can spread to neighbouring grids, and the lack of common protocols magnifies this risk.

Possibilities, ranked

1
Gradual, mainly bilateral progress70%
Countries prioritise national stockpiles; the ASEAN Power Grid expands slowly through bilateral and sub-regional line agreements rather than joint governance.
Watch: New bilateral cross-border electricity trade agreements; lines added to the 7.7 GW interconnection capacity
2
Agenda shifts, projects stall25%
If Hormuz tensions ease and oil prices fall, priorities change; political obstacles and financing gaps delay regional grid projects.
Watch: A marked fall in oil prices accompanied by postponed grid financing commitments
3
Crisis accelerates joint governance5%
Building on the 2025 Enhanced ASEAN Power Grid memorandum, data sharing, cybersecurity and emergency mechanisms are made binding.
Watch: Adoption of a regional emergency framework for grid disruptions and a common cybersecurity protocol

Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.

Original publication: fulcrum.sg · 2 September 2026

This page summarises the institution's view and does not reflect the view of Talay Insight. No direct quotation is used.