Six months into the U.S.-Israeli war against Iran, Southeast Asia’s exposure to a conflict thousands of miles away has proven durable rather than transient — and it is beginning to function as a genuine stress test of the region’s institutions, not just its energy bills.
For ASEAN, the question is no longer simply how much the war is costing, but whether a shared vulnerability can produce a more collective response. So far, the crisis is exposing both the limits of regional integration and the pressures pushing it forward.
A Regional Shock, Unevenly Felt
The war’s immediate costs are well documented: soaring import bills, curtailed industrial activity, a scramble for alternative suppliers. Less examined is what the shock is revealing about ASEAN itself — a bloc whose members have mostly responded as 11 separate countries rather than one coordinated group. Now under real pressure, ASEAN is testing two long-stalled integration projects, a shared strategic oil reserve and a regional power grid. Neither is a new idea. In fact, both have circulated in ASEAN working groups for years without producing concrete infrastructure.
Regional institutions rarely emerge because governments suddenly embrace integration for its own sake; more often they emerge because repeated crises raise the costs of acting alone above the political costs of acting together. Whether the Iran war has pushed Southeast Asia past that threshold rather than simply generating another round of proposals that quietly lapse once prices ease is the real question here not simply whether the war has been costly.
The numbers describe a region absorbing a shock disproportionate to its role in the conflict. The International Energy Agency projects that Southeast Asia’s energy import bill will roughly double this year to about $160 billion, a record, and warns the figure could climb to $400 billion by midcentury if current policies hold. The Asian Development Bank has cut its 2026 growth forecast for developing Asia and the Pacific to 4.9 percent, down from an April projection of 5.1 percent.
What makes the shock harder to manage is how unevenly it lands within the bloc. Before the war, around 60 percent of Southeast Asia’s crude oil imports and a third of its natural gas imports originated from the Middle East, and the region’s capacity to absorb a supply disruption varies enormously by country. The bloc spans net energy exporters, mid-sized crude importers with partial refining capacity, and entirely import-dependent economies with no meaningful buffer at all. That spread has turned a regional shock into an intensely local one.
Cambodia is absorbing the sharp end of it, with industrial construction halted, offices rationing lighting, and malls and restaurants required to close early. A roughly 300-megawatt electricity shortfall falls hardest on villages, where outages can stretch for hours a day. The contrast with more resilient ASEAN economies is instructive. Vulnerability reflects more than import dependence. It also depends on the flexibility of a country’s domestic energy system, including its refining capacity, reserve depth, and access to alternative suppliers on short notice.
Adaptation Is Not Resilience
The scramble for alternatives has pushed several U.S. partners in Southeast Asia toward Washington’s rivals — an outcome likely to outlast the war itself. Philippine President Ferdinand Marcos Jr. discussed energy security with Vladimir Putin at a summit in Kazan in June, while Indonesia and Thailand have sought deeper energy ties with Moscow as their governments diversify away from a chokepoint they no longer trust to remain open. Cambodia has broken ground on a nearly $1 billion Chinese-backed hydropower project, while Laos is expanding electricity links with Beijing. The common thread is not a wholesale pivot away from Washington, but a widening effort to hedge against dependence on a single chokepoint — and, by extension, on any one external security provider.
It is worth pausing on what these hedges accomplish, because adaptation and resilience are not the same thing. Buying Russian crude, courting Chinese hydropower financing, and cutting LNG imports are all adaptive in that they get governments through the current shock. But some of these swaps trade one dependency for another rather than reducing dependency itself. Indonesia and Thailand deepening energy ties with Moscow substitutes a sanctioned, geopolitically fraught supplier for a chokepoint-vulnerable one. Cambodia’s hydropower buildout and Laos’s grid links with Beijing substitute a transit-dependent fuel for domestically generated electricity, offering a genuine, if partial, reduction in vulnerability rather than a lateral move. The useful question for each decision, then, is whether it leaves the country better or merely differently exposed the next time a chokepoint closes.
The Kazan summit provides a useful test of that distinction. ASEAN and Russia adopted a joint statement on energy cooperation spanning LNG, natural gas, renewables, nuclear power, and broader energy-transition initiatives, while Laos separately signed an agreement to explore a Russian-designed nuclear plant, mirroring an earlier deal Moscow struck with Vietnam. No ASEAN state publicly pledged to increase Russian oil imports at Kazan, and the bloc’s post-summit language carefully avoided terms that would turn hedging into alignment. But the summit was the first ASEAN-Russia meeting since 2021, and its timing — six months into a war none of these countries had a hand in starting — was not incidental. Energy hedging was already beginning to generate wider diplomatic consequences.
From National Fixes to Regional Institutions
The more consequential test is whether the crisis produces durable regional institutions rather than a patchwork of national fixes. For most of the war, ASEAN defaulted to national action, with members pursuing separate energy deals even as they managed the diplomatic fallout with Washington. That pattern reflects a longstanding weakness: regional mechanisms tend to advance only when national responses prove insufficient.
That may now be beginning to change. At the bloc’s May summit in Cebu, Indonesia’s energy minister, Bahlil Lahadalia, proposed hosting a shared ASEAN strategic oil reserve in Sumatra and said Indonesia would build the facility regardless of whether it secured the regional designation. ASEAN economic ministers have also agreed to accelerate ratification of the ASEAN Petroleum Security Agreement (APSA), a 2009 pact allowing members facing shortages to draw fuel assistance equivalent to at least 10 percent of domestic demand but which has never been enforced. ASEAN Secretary-General Kao Kim Hourn has said ratification should be completed before the bloc’s 49th summit later this year.
Whether these initiatives amount to institutionalization is the real test. A reserve that is built and stocked, clear rules for drawing it down, and a functioning APSA would mark a meaningful shift from voluntary cooperation toward collective energy security. But the trust deficit within ASEAN remains a constraint. If the Sumatra hub and APSA ratification both materialize, they would represent an important beginning — but not yet proof that ASEAN can turn crisis-driven cooperation into durable regional capacity.
“Momentum” is the word that recurs in nearly every account of this moment, including this one, and it is worth being skeptical of it. Momentum describes an observed direction of travel; it does not explain what sustains that direction once the conditions that produced it change. The Sumatra hub and APSA ratification are advancing because oil prices are elevated, the shock remains politically salient, and Indonesia has a minister willing to spend political capital championing the idea. Each condition is reversible. Prices could ease if the ceasefire holds; political attention could shift, as it reliably does, to the next crisis; and financing a shared reserve is a multiyear commitment that a change of government could unwind. None of this makes the current progress meaningless. Indeed, it is more institutional movement than the bloc has produced in years. But the real measure of success is not whether Cebu produced a proposal; it is whether that proposal survives a return to normalcy.
The ASEAN Power Grid presents a similar test. The cross-border electricity interconnection scheme has been discussed for more than a decade without being fully realized, but officials are now pushing it toward operationalization, describing it as one of the bloc’s most consequential cooperative projects. A more integrated grid could help ASEAN balance supply across borders, absorb more renewable generation, and reduce the kind of import dependence the war has exposed. Yet the underlying obstacles—financing, infrastructure, national interests, and political coordination—have not disappeared simply because Hormuz has become unreliable. As with the oil reserve, the question is whether the crisis converts long-standing ambition into durable integration or merely gives another stalled initiative a temporary push.
The bloc is not building this from nothing. ASEAN and the Gulf Cooperation Council share a multiyear energy cooperation framework that has helped deepen Gulf-ASEAN energy ties. But the contrast is revealing: external cooperation has advanced more easily than internal coordination because the former does not require ASEAN members to pool scarce resources or surrender control over them. The Sumatra hub and APSA ratification face precisely that harder problem. A shared reserve requires governments to accept common rules on financing and drawdown and, ultimately, to trust that a neighbor will share fuel during a crisis rather than keep it for itself. That helps explain why ASEAN has found it easier to institutionalize energy ties with outsiders than mutual energy security among its own members.
Conclusion
The honest summary of where ASEAN stands is this. The war has exposed, with unusual clarity, how little buffer much of Southeast Asia carries against a shock generated thousands of miles away, while also producing the strongest push toward pooled energy security the bloc has seen in years. But proposals are not reserves, and momentum is not institutional capacity. If the ceasefire holds and prices ease, the urgency behind the Sumatra hub and APSA ratification may fade, leaving ASEAN to repeat the pattern of adapting individually rather than collectively. If the conflict reignites, the region will discover whether the institutions now being advanced can absorb the next shock.
That is the larger test. Regional organizations are easy to judge by their declarations in calm periods; their real value becomes visible when a crisis forces governments to choose between acting alone and accepting the constraints of acting together. The Iran war has given ASEAN precisely that test. Whether ASEAN can turn crisis-driven momentum into lasting capacity will determine whether the Iran war was merely a shock the region endured or a catalyst that changed how it prepares for the next one.
John Calabrese is an Assistant Professor at American University.
