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Article
05 May 2026

After the Hormuz Disruption, Asia Should Build an Energy Security Alliance

Context

  • Global energy systems are deeply influenced by geopolitical crises, and history shows that such disruptions often lead to institutional innovation.
  • The recent energy shocks following the Ukraine conflict and the closure of key maritime routes highlight Asia’s vulnerability to external supply disruptions.
  • Drawing from historical precedent, particularly the formation of the International Energy Agency (IEA), it is important to examine the idea for the creation of a new regional institution, the Asian Energy Collaborative Compact (AECC), to address Asia’s evolving energy security challenges.

Historical Context: Lessons from the 1973 Oil Crisis

  • The Impact of the Yom Kippur War
    • The Yom Kippur War triggered a global oil crisis when Arab oil producers imposed an embargo, causing crude oil prices to surge dramatically.
    • This led to a worldwide economic recession and exposed the vulnerability of oil-importing nations.
  • Formation of the IEA
    • In response, Henry Kissinger convened Western leaders to create a coordinated mechanism to counter producer cartels like OAPEC.
    • The result was the IEA, which provided collective energy security, market intelligence, and crisis management.

Contemporary Crisis: Strait of Hormuz Closure

  • Immediate Economic and Energy Impacts
    • The closure of the Strait of Hormuz has severely disrupted global oil flows, particularly affecting Asia, which relies heavily on imported energy.
    • Millions of barrels of oil have been stranded, leading to shortages and emergency measures across countries like India, Japan, and the Philippines.
  • Exposure to Maritime Chokepoints
    • This crisis has underscored Asia’s dependence on vulnerable sea routes, including the Strait of Malacca, the Taiwan Strait, and the South China Sea.
    • Although governed by international norms under the United Nations Convention on the Law of the Sea (UNCLOS), these routes remain susceptible to geopolitical tensions and disruptions.

The Need for a Regional Response

  • Shared Vulnerabilities Across Asia
    • Despite differences in political systems and economic development, Asian countries share common concerns regarding energy security and supply chain resilience.
    • These shared vulnerabilities create a strong basis for regional cooperation.
  • Limitations of Existing Institutions
    • While the IEA plays a crucial role in global energy governance, its alignment with Western economies limits its effectiveness in addressing Asia-specific challenges.
    • This gap necessitates a dedicated regional institution.

The Objectives of Asian Energy Collaborative Compact (AECC)

  • Safeguarding Maritime Navigation
    • The AECC would work to ensure free and secure passage through critical maritime routes, protecting the principle of innocent passage and reducing risks associated with chokepoints.
  • Strengthening Collective Bargaining Power
    • By aggregating demand, Asian countries could negotiate better pricing and terms with energy exporters.
    • Addressing the Asian Premium would reduce costs and enhance market efficiency.
  • Accelerating the Green Energy Transition
    • The AECC would facilitate collaboration in renewable energy by pooling technological, financial, and human resources.
    • It would act as a think tank to identify synergies and promote sustainable energy solutions.

Challenges to Implementation

  • Political and Strategic Diversity
    • Asia’s diversity in governance systems and geopolitical interests may hinder unified action.
    • Unlike the Western bloc that formed the IEA, Asia lacks a cohesive political framework.
  • Balancing Sovereignty and Cooperation
    • While collective negotiation offers advantages, countries may be reluctant to compromise their autonomy in energy policy and trade decisions.

Future Outlook: Transitioning Beyond Fossil Fuels

  • The instability in global oil markets, highlighted by shifts within producer groups, reinforces the urgency of transitioning to renewable energy.
  • Although progress has been made, no Asian country has yet achieved dominance of renewables in its energy mix.
  • The AECC could play a pivotal role in accelerating this transition through coordinated strategies and shared innovation.

Conclusion

  • The evolving geopolitical landscape and recent energy disruptions underscore the need for a coordinated Asian response to energy security.
  • Drawing lessons from the past, the proposed Asian Energy Collaborative Compact offers a strategic framework to address shared challenges.
  • By enhancing maritime security, strengthening bargaining power, and promoting renewable energy collaboration, the AECC could significantly improve Asia’s resilience and sustainability in an uncertain global energy environment.
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