The Iran War Is Reshaping Asia's Energy Security Strategies

Source: Council on Foreign Relations (CFR)
Date: March 26, 2026
URL: https://www.cfr.org/articles/the-iran-war-is-reshaping-asias-energy-security-strategies

Key Findings

Scale of Disruption

  • The Iran war has generated the largest-ever disruption in oil supplies according to the International Energy Agency (IEA)
  • Oil price has skyrocketed as Tehran has essentially closed the Strait of Hormuz
  • Persian Gulf oil and LNG producers have shuttered or cut back operations
  • Every major stock market has fallen since the war started

IMF Projections

  • A 10% increase in energy prices lasting one year would increase global inflation by 40 basis points and slow global economic growth
  • The war has already plunged the world into its largest-ever disruption in oil supplies (IEA) — with inventory-draws at record pace and refinery throughput cuts compounding the supply shock

Asia's Exposure

  • Many Asian economies depend heavily on imported fossil fuels from the Middle East
  • Most Southeast Asian countries have reserves of oil and LNG lasting only 20 to 50 days (per Economic Research Institute for ASEAN and East Asia studies) — critically below the oecd-inventory-operational-floor equivalent for these import-dependent economies
  • AI data center expansion is compounding energy demand growth across Asia

Japan's Response

  • Japan has the third-largest strategic petroleum reserve in the world
  • Japan is rethinking its energy future and leading the region's embrace of nuclear energy
  • Prime Minister Takaichi Sanae has vowed to achieve 100% energy self-sufficiency, largely through nuclear
  • Timeline for nuclear expansion is being accelerated in response to the crisis

China's Nuclear Plans

  • China had already planned to build 23 new nuclear reactors
  • The war may accelerate nuclear expansion plans as part of energy security strategy

Structural Change

  • The crisis is driving structural shifts in Asia's energy planning
  • Countries are rethinking dependence on Middle East fossil fuels
  • Nuclear energy is gaining acceptance as a strategic solution

Bibliography

  • Council on Foreign Relations, "The Iran War Is Reshaping Asia's Energy Security Strategies," March 26, 2026. https://www.cfr.org/articles/the-iran-war-is-reshaping-asias-energy-security-strategies