ASEAN’s energy crisis — and Japan’s opening in the Middle East oil shock

The Middle East crisis, triggered by US and Israeli strikes on Iran in late February, has sent a systemic shock through ASEAN that transcends a mere spike in crude oil prices. Its significance lies less in market volatility than in the exposure of underlying institutional weaknesses in the region’s energy security framework.

Under the ASEAN Economic Community (AEC), ASEAN has championed the concept of a “Single Market and Production Base”. While meaningful progress has been made in trade liberalisation and customs facilitation, responses in the energy sector have largely remained national in scope, with limited development of regional institutional mechanisms.

While Indonesia, Malaysia, and Brunei are the representative oil producers of ASEAN, with the notable exception of Brunei, these countries are net importers, with demand outstripping supply. In a structure heavily dependent on the Middle East for energy supplies, the risk of a blockage of the Strait of Hormuz is a destabilising factor for the regional economy.

Furthermore, ASEAN’s oil stockpiles range from only about 20 days to two months, which falls far short of the 90-day standard mandated by the International Energy Agency (IEA) for its members. In the face of the current Middle East crisis, the sense of alarm is intensifying.

At the ASEAN Economic Ministers’ Retreat held in March following the escalation of the Middle East crisis, a consensus was reached on diversifying supply sources, cooperation in stockpiling, the utilisation of renewable energy, and the maintenance of supply chains. However, these points remain merely indications of the direction for coordination and fall short of establishing binding mechanisms such as joint stockpiling or mutual supply arrangements.

Energy security continues to remain within the realm of national sovereignty, and a unified regional response has yet to be achieved. In addition to price controls and energy-saving measures, Thailand sought to secure safe passage for Thai-flagged tankers through the Strait of Hormuz via diplomatic negotiations with Iran. Meanwhile, the Philippines, having declared a state of energy emergency, negotiated with the Russian government and commenced the import of Russian crude oil.

In 2009, ASEAN concluded the ASEAN Petroleum Security Agreement (APSA) to facilitate regional fuel sharing and ensure swift responses to severe supply shortages in member states. Even after its renewal in 2025, the agreement remains limited to a voluntary and commercial-based cooperation framework; its voluntary and non-binding nature limits its practical effectiveness.

It has become clear that ASEAN faces significant challenges in terms of energy security. The Asian Development Bank (ADB) pointed out that if disruption is prolonged, inflation could rise by up to 3.2 percentage points, while economic growth in Asia and the Pacific could be lowered by up to 1.3 percentage points.

The challenges confronting ASEAN are clear. First, energy security must be redefined not as a peripheral issue of the ASEAN Economic Community (AEC), but as a core area of integration. Second, there must be a transition from national-level crisis responses to collective responses based on regional systems to ensure practical effectiveness.

Specifically, this involves setting minimum stockpiling standards, institutionalising demand-restraint measures for emergencies, creating frameworks for price stabilisation, strengthening data sharing, and developing port and storage infrastructure. In particular, mechanisms for communal stockpiling and reciprocal supply arrangements are inescapable points of contention in future institutional design.

To realise such institutional designs, Japan’s involvement would be highly valuable. Having developed robust energy security systems in the wake of past oil shocks, Japan’s engagement in ASEAN — backed by its substantial strategic reserves — could serve as both a catalyst for institutional development and a stabilising force in the current crisis.

Under these circumstances, specific requests have been made to Japan by the Philippines and Vietnam regarding the provision and accommodation of oil stockpiles. However, since the release of stockpiles entails impacts on domestic supply and prices, public understanding within Japan is indispensable. Yet, given Japan’s energy structure, it is crucial to design this not as a simple provision, but as a mutually complementary cooperation framework.

In other words, while Japan possesses vast depth in its strategic crude oil reserves, its stocks of petroleum products such as naphtha are limited. Conversely, if a mutually complementary relationship can be established between Japan and ASEAN — through mechanisms such as oil and petroleum product swaps or communal stockpiling — cooperation can proceed without increasing supply risks on the Japanese side.

An institutional design framed not as “one-way assistance” but as a framework for mutual risk sharing is likely to be accepted as a rational choice even within Japan. By clarifying a structure in which support for ASEAN directly leads to the strengthening of Japan’s own energy security, it becomes possible to secure domestic support.

The Middle East crisis is forcing ASEAN to shift its focus of integration from peacetime efficiency toward resilience in times of crisis. Whether or not ASEAN can establish a regional response capacity in the foundational field of energy will be the litmus test for the future effectiveness of the AEC.

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