Why Asia Hopes for a Short Mideast War
The conflict has already exposed structural vulnerabilities that can’t be fixed easily.
By Victoria Herczegh
The war in Iran has already had far-reaching consequences in the Asia-Pacific.
The region is highly dependent on Middle Eastern oil, liquefied natural gas and petrochemicals, so the closure of the Strait of Hormuz immediately triggered inflationary pressure, supply chain disruptions and strategic uncertainty.
With its strategic stockpiles of crude, China is relatively well-prepared for future disruptions, but others, including Japan, South Korea and members of the Association of Southeast Asian Nations, are struggling to plug long-standing structural vulnerabilities.
How badly the current crisis affects them will ultimately depend on how long the war lasts and how much energy is let through the Strait of Hormuz.
But in the short term, the conflict has already reshaped economic expectations and geopolitical calculations throughout the Asia-Pacific.
Japan is one of the most exposed advanced economies in the world.
Middle Eastern exports cover some 80 percent of its energy needs.
High oil prices have intensified concerns about stagflation as rising energy costs threaten to suppress already fragile economic growth.
Financial markets have reacted accordingly; sustained declines in the Nikkei index and a weakened yen reflect investor anxiety over long-term economic damage.
The bigger issue is that, in Japan, economic recovery has long been limited by structural stagnation, making it especially vulnerable to external shocks of this magnitude.
The Japanese government has moved quickly to release 80 million barrels from its strategic petroleum reserves – a measure meant to stabilize domestic supply and cushion price volatility while authorities prepare to intervene in currency markets to prevent further depreciation of the yen.
However, this will bring only temporary relief.
The long-term dependence on imported energy remains unresolved.
The longer the situation drags on, the more likely it is that inflationary pressure will spread throughout the rest of the economy.
The political implications are just as significant.
Prime Minister Sanae Takaichi has a strategic dilemma: The United States has begun to pressure allies to help secure shipping lanes in the Strait of Hormuz.
It has specifically asked Tokyo to send warships.
Maintaining its alliance with the U.S. is crucial for Tokyo, but domestic legal constraints and public opposition severely limit the government’s ability to use military force.
In Japan, public support for the war is extremely low, and constitutional restrictions complicate any direct involvement in a foreign conflict.
Compliance with the U.S. thus risks domestic backlash, while refusal could hurt bilateral relations and imperil Japanese security.
The crisis has forced Japan to confront deeper questions about its strategic autonomy, its reliance on the U.S. and the limits of the postwar security framework.
(As of March 17, Japanese Foreign Minister Toshimitsu Motegi has told U.S. Secretary of State Marco Rubio that Japan is willing to help the U.S. secure the strait, but the specific details have yet to be determined.)
South Korea faces similar dilemmas.
With around 70 percent of its crude oil imports originating in the Middle East, the disruption of supply routes has had a pronounced impact on financial markets, triggering sharp declines in stock prices and significant currency depreciation.
Growth projections are already under pressure as rising oil prices threaten to dramatically reduce economic expansion and, according to some of the more extreme projections, halve expected growth rates.
These developments highlight the extent to which South Korea’s economy is linked to stable and affordable energy imports.
Beyond the immediate market issues, the crisis has also shown deeper structural vulnerabilities, particularly in the semiconductor sector, the backbone of the Korean economy.
Semiconductor manufacturing is highly energy-intensive, and disruptions to energy supply chains seriously threaten production.
Given South Korea’s leading role in global memory chip markets, any prolonged disruption could have far-reaching consequences for global technology supply chains.
As in Japan, the government in Seoul has implemented short-term countermeasures, including fuel price caps and the release of strategic oil reserves to stabilize domestic conditions.
Yet the crisis has prompted discussions about long-term energy diversification, with renewed emphasis on expanding nuclear and renewable energy capacity.
Korean policymakers increasingly recognize energy diversification not as an economic nicety but as a strategic need.
Efforts to modernize the electrical grid and expand domestic energy production are likely to gain momentum as the country seeks to lower future vulnerabilities.
Meanwhile, the redeployment of U.S. military assets in South Korea to the Middle East – specifically, parts of the Terminal High Altitude Area Defense (THAAD) anti-ballistic missile system and other military hardware that are crucial to defense against North Korea – has raised concerns in Seoul over the reliability of U.S. security guarantees.
(It’s unclear whether the THAAD systems will return to the peninsula after the war.)
This has led to a broader debate about strategic autonomy, leading to increased calls for greater independence in both defense and energy policy.
The crisis is therefore forcing South Korea to reassess its long-term strategic position.
For Japan and South Korea, the crisis in the Middle East has also reignited conversation over the nuclear issue.
Put simply, the failure of Iran’s nuclear posture to deter attack has cast doubt on whether maintaining a latent nuclear capability is enough to maintain security in an increasingly volatile environment.
There is concern in both countries that such strategies may create a “window of vulnerability,” during which adversaries might be incentivized to act preemptively.
As confidence in extended deterrence declines, discussions about increased security self-reliance, including potential nuclear options, are likely to intensify.
In Southeast Asia, the impact of the war is widespread but uneven, reflecting significant differences in economic structure, energy dependencies and political priorities among ASEAN member states.
Recent estimates suggest that around 60-70 percent of ASEAN’s crude oil imports originate from the Middle East, a substantial share of which transit the Strait of Hormuz.
LNG price spikes linked to the conflict have already pushed Asian spot LNG prices up by double-digit percentages.
In countries like Vietnam, Thailand and the Philippines, fuel import costs have risen sharply, contributing to inflationary pressures and forcing governments to consider expanding subsidies.
They are currently exploring fuel purchases from Russia in the near future.
Indonesia (despite being an oil producer) has warned of tighter budgets thanks to higher global oil prices.
Malaysia faces similar pressures because of its long-standing fuel subsidy system.
The country is bracing for higher food prices due to supply chain disruptions as well.
The consequences can already be felt in rising fuel prices, pressures of inflation and growing concerns about potential shortages.
Most other countries in the region have limited oil reserves, often sufficient for only a few weeks of consumption – for example, Taiwan has 100 days of inventory cover, while Singapore can last only about 40 days.
This increases their vulnerability in the event of prolonged disruptions.
Governments have responded with a variety of measures, including fuel conservation policies, price controls and efforts to secure alternative supplies.
Yet these responses introduce financial constraints and structural limitations, making them less effective against prolonged external shocks.
Politically, the crisis has once again highlighted ASEAN’s typical lack of cohesion, economically and politically, in responding to major geopolitical events.
The members of the bloc have different levels of exposure and capacity, making any coordinated action difficult to achieve.
Though there are calls for greater regional cooperation, particularly in fields such as energy security and infrastructure development, structural differences and competing national interests continue to limit the prospects for a unified ASEAN approach.
Thus, beyond general statements of “deep concern,” ASEAN has yet to outline specific collective countermeasures to the crisis in the Middle East.
Which is problematic considering the crisis may have longer-term implications for the region’s energy strategy.
As in other places, there is growing awareness of the need to diversify energy sources and reduce dependence on imported fossil fuels in favor of renewable energy and regional power integration.
Initiatives such as the ASEAN Power Grid could, in theory, boost resilience by enabling greater sharing of resources across borders.
But progress is slow, and it is still unclear whether the current crisis will be enough to overcome entrenched barriers to cooperation.
The overall impact on the region will greatly depend on the duration and intensity of the conflict, and the options at the disposal of regional states can offer only short-term relief.
If the conflict ends quickly, the damage can be contained.
But a longer conflict would have serious consequences, including stagflation in advanced economies and even more financial duress in less advanced ones.
The extent to which countries in the region can adapt by reducing vulnerabilities, boosting resilience and redefining strategic priorities will determine not only their response to the current crisis but also their positions in an increasingly uncertain global landscape, even with the United States.
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