ASEAN winners and losers in the era of the Hormuz crisis

The Hormuz crisis is too often seen as ASEAN oil-shock story. Truth is, it is that. But in addiiton it’s a human ledger of pain and an economic index of sorts. Ask who’s been hurt the most regionally, and the answer is more complex than most of us might imagine. The answer is also not the most obvious one. Indonesia and its currency would be the obvious standout contender. The rupiah, makes for easy “1997 all over again” headlines, and the story makes perfect sense: the Strait of Hormuz closed and oil prices spiked. In late February, Indonesia’s import bill for the crude it relies on ballooned, draining dollars and hammering the currency. By June the rupiah had broken through levels not seen even during the legendary 1997 collapse, which spilled through the region to Bangkok, earning it the regional “tom yum kung crisis” moniker. Analysts have noted rightly that the comparison is more evocative than exact. Private dollar debt today is far smaller than it was in the late 1990s, and the current depreciation looks more like a painful but manageable balance-of-payments adjustment than the prelude to a banking collapse. But the headline wrote itself regardless, and headlines shape how a crisis gets remembered – even when, as has been the case recently, the country with the scariest charts is not the one where the economy hurts the most. Where it really hurt: the Philippines The real ASEAN Hormuz casualty is the Philippines, fourth-largest ASEAN nation by land mass, second by population and yet, apparently, small enough for analysts to overlook it, or at least as far as the crisis narrative has done so far. The Philippines doesn’t have a strategic reserve problem so much as a dependency problem: near-total reliance on Gulf crude, backed by next-to-no commercial fuel buffers. The result was a declared state of national energy emergency (sometimes referred to as EO 110, a one-year mandate), and jeepney drivers striking over fares they could no longer absorb. The country’s president signed the order in late March, citing the closure of the strait as a direct threat to the Philippines’ energy security and authorizing measures against hoarding and price manipulation alongside a broader livelihoods-and-transport-support package. By July, commentators were still pointing out that the emergency declaration bought time – it was a one-year mandate to be specific) but did not fix the underlying exposure. Diesel prices had seen some of the steepest increases worldwide, and analysts used the president’s mid-year address to press the point directly: The Philippines’s weakness is that it actually lacks a strategic petroleum reserve of its own, and also lacks the grid modernization needed to absorb the renewable capacity that might eventually reduce the exposure altogether. A one-year emergency mandate is not a substitute for structural buffers. It was a crucial point that got buried, as such things unfortunately do at times by striking jeepney drivers. Meanwhile, in March and April, prices at the pump in the Philippines were approximately double those of Malaysia, Vietnam and Thailand – same crisis, wildly different pain points depending on each country’s fuel subsidies and import structures and headlines that dodged the real story. Laos: ASEAN’s smallest battery It’s the most obvious candidate for the hardest-hit economy that comes as a surprise when you look at the real ASEAN numbers during the Hormuz Strait Crisis . After a very tough start, Laos – landlocked, fewer than eight million people, one of ASEAN’s smallest economies at around US$16-18 billion GDP, a minnow next to its neighbors, began to clamber back onto its feet. The country had zero domestic oil production, when the Hormuz crisis crunched. Hundreds of fuel stations closed by March, diesel prices were up well over 100% within a single month, and school weeks had to be cut short. For a few weeks ahead of the annual water festivities – songkran in Thailand, simply Lao New Year (pi mai Lao) in Laos – the empty pumps and shortened school terms made Laos look like a regional casualty that would likely come out of 2026 with a permanent limp. The quiet reprieve was barely noticed by anyone. Through March and April, Thai officials stuck to exporting refined fuel to Laos even as they cut most other exports to protect their own reserves. They did that despite absorbing a 50% cut to their own crude supply from the Hormuz closure. By June, Laos and Thailand’s state energy company had signed a formal cross-border supply agreement, and Vientiane had reinstated the higher fuel taxes it had suspended during the crisis, a quiet signal that the emergency had passed. Why did Thailand keep the lifeline open when its own reserves were under strain? The reaon is that its relationship with Laos, like all healthy relationships, runs two ways. Thai officials noted that fuel exports to Laos and Myanmar are tied to Thailand’s own hydropower imports from Laos – energy cooperation that cuts in both directions. Bangkok has since moved to deepen that dependency further, increasing its hydropower purchases from Laos as part of its own energy diversification. Laos, in other words, was never purely a supplicant in this relationship. Its dams give Thailand something it needs. If there’s a valuable takeaway from the Hormuz crisis for the region it’s that active business relationships count for more than who has the biggest economy. Laos, it turns out, has more than one relationship to lean on. Its hydropower flows not just to Thailand but into a wider regional grid, and in May, Russia was reportedly exploring its first-ever petroleum exports to Laos via Vietnamese ports – one more channel opening up for a country that, on paper, should have had none. A regional undercurrent running through all of this has little to do with oil. Thailand’s energy relationship with Laos cannot be separated from the unresolved border tension between Thailand and Cambodia, nor from the arms trade that surrounds it. This summer, Thailand’s prime minister met China’s president in Shanghai, with Thai-Cambodian border security high on the agenda. The meeting came weeks after Thailand lodged a formal complaint over Chinese tank deliveries to Cambodia – deliveries Beijing says were agreed years before the border clashes and were only delayed, not created, by the recent tension. But it’s no secret that Thailand has spent the past year steadily building up its own arsenal of Chinese hardware – tanks, missiles, ships and a revived submarine deal – explicitly framed around the same border dispute. China is not secretly arming one side against the other so much as openly supplying both, a position Beijing insists is commercial rather than strategic, and Bangkok appears willing to accept that, at least publicly, in exchange for Beijing’s offer to help mediate the underlying dispute. If China has a position here, it’s the deterrence model of supporting both sides in order to disincentivize outright conflict, while taking a backseat commanding role in terms of regional stability. Indonesia and the Philippines, by contrast, faced the Hormuz shock largely alone – big enough economies to matter, but without the same dense mesh of neighborly obligations to fall back on when the ships stopped moving through the strait. Back to the key point, none of this means reserves are not of the essence. Thailand’s own buffer, built up under emergency directives through March and April, gave it room to keep exporting to its neighbors even under strain: Reserves and relationships are not really in competition; they compound each other. But the countries that came through the crisis with the least visible damage were not always the ones with the deepest reserves. They were the ones that had already spent years building relationships they could call on when the reserves ran short. Six months on, empty gas stations and closed schools no longer hog headlines, either in Vientiane or in the region. That itself is worth noting. The crisis exposed the region’s energy security weaknesses – and how much of what held it together in the worst weeks was not stockpiled fuel but mutual favors between neighbors who need each other for reasons that have nothing to do with oil. Laos had the connections that got the pumps flowing again when all, briefly, appeared lost. Indonesia had reserves enough to keep things running while it absorbed the inflation. The Philippines had neither – which doesn’t mean it’s finished, just to a steeper climb ahead and without a reserve of its own or a web of neighborly favors to draw on. Whatever comes next, Manila will have to pay the price forward – and at the prices the market sets. Chris Taylor is senior risk consultant for Access Asia Group, a due diligence consultancy based in Singapore.