The disruption of oil and gas shipments through the Strait of Hormuz is accelerating Southeast Asia’s push to diversify energy sources, with the Philippines emerging as one of the region’s fastest-growing solar markets, according to a new report from the International Energy Agency (IEA).

In its Southeast Asia Energy Outlook 2026, published June 16, the IEA said the ongoing energy crisis triggered by conflict in the Middle East has exposed the risks of the region’s dependence on imported fuels and reinforced the need for alternative energy sources, greater electrification, and stronger regional cooperation.

The report noted that Southeast Asia remains heavily exposed to supply disruptions, with the Middle East accounting for 60% of the region’s crude oil imports. Nearly half of the oil products refined or consumed across Southeast Asia are derived from Middle Eastern crude.

As governments respond to the crisis, the IEA said investment is increasingly flowing toward domestic and renewable energy resources.

“Diversification of energy sources and supply routes is now a central priority, with deployment of different fuels and technologies, electrification and efficiency serving as important levers to reduce import exposure and strengthen resilience,” said IEA Executive Director Fatih Birol.

The Philippines was highlighted as a key beneficiary of the region’s accelerating energy transition. According to the report, the country became the second-largest destination for Chinese solar exports in the first quarter of 2026, with imports around three times higher than in the same period a year earlier.

The IEA said renewable energy capacity across Southeast Asia is already on track to nearly triple within a decade under current policy settings, with solar deployment showing early signs of additional momentum amid heightened energy security concerns.

“Southeast Asia is a crucial region shaping global energy trends and set to account for 20% of the growth in the world’s energy demand over the next decade, second only to India,” Birol said.

The report also pointed to nuclear power as a potential long-term diversification option for several Southeast Asian countries, although deployment timelines and construction challenges remain significant.

Despite the growing focus on renewables, the IEA noted that coal could continue to play a role in some markets as governments seek to balance energy security and affordability.

Looking ahead, the agency said Southeast Asia’s energy import bill is projected to reach USD 160 billion this year and could rise to UJSD 400 billion by mid-century under current policy settings, highlighting the economic stakes of reducing dependence on imported fuels.

The report also emphasized the importance of energy efficiency measures and regional initiatives such as the ASEAN Power Grid to improve resilience and strengthen electricity security as power demand continues to rise across the region.

What do you think? Will the current supply crisis accelerate renewable energy investments in the Philippines, or will energy security concerns prolong reliance on conventional fuels?

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