The disruption of the Strait of Hormuz is not a temporary crisis, but a systemic shock threatening Southeast Asia’s (SEA) energy security and economic stability, according to a report by Jakarta-based Economic Research Institute for ASEAN and East Asia (ERIA).

Describing the closure of the vital shipping route as a ‘structural rupture’ in global energy trade, the ERIA issue paper said member countries of the Association of Southeast Asian Nations (ASEAN), including Cambodia, are particularly exposed due to their heavy reliance on imported energy.

The Strait of Hormuz disruption is a systemic shock threatening Southeast Asia’s energy security and economic stability, a report by Economic Research Institute for ASEAN and East Asia said.
Flagging cascading impacts across key sectors beyond energy markets, it cautioned that these combined pressures could lead to slower economic growth, rising inflation and financial instability across the region.

The ASEAN region imports about two-thirds of its crude oil, with some like Cambodia, Singapore and the Philippines almost entirely dependent on external supplies. This dependence, combined with concentrated sourcing from the Middle East, makes ASEAN highly vulnerable to prolonged supply disruptions, the report noted.

Flagging cascading impacts across key sectors beyond energy markets, it cautioned that these combined pressures could lead to slower economic growth, rising inflation and financial instability across the region.

Higher import bills are expected to widen current account deficits, while currency volatility and capital outflows may further strain economies, it said.

The situation also poses risks to migrant workers in the Middle East, potentially affecting remittances that many ASEAN households depend on, it observed.

As fragmented national responses are insufficient to address such a complex crisis, ERIA called for stronger regional coordination, arguing that unilateral actions like stockpiling or subsidy policies could worsen supply shortages and increase competition among countries.

To strengthen resilience, the report outlined several strategic recommendations. These include developing indigenous energy resources such as biofuels, expanding regional energy trade and enhancing infrastructure through initiatives like the ASEAN Power Grid and Trans-ASEAN Gas Pipeline.

It also called for the creation of shared strategic reserves and coordinated stockpiling mechanisms to ensure more stable access to energy during crises.

ERIA also stressed on the importance of diversifying supply sources, accelerating renewable energy deployment and improving energy efficiency.

The Hormuz disruption is a ‘stress test’ for ASEAN’s economic and energy systems, and long-term resilience will depend on deeper regional integration, coordinated policymaking and a shift towards a more secure and diversified energy architecture, the report concluded.

Fibre2Fashion News Desk (DS)

Europe faces renewed economic risks as escalating Middle East tensions disrupt energy markets, echoing the shock experienced in 2022 following the loss of Russian oil and gas supplies, according to S&P Global Ratings. While the region is better prepared than before, rising energy prices are already feeding into inflation and broader economic pressures.

Energy shocks typically unfold in stages, beginning with a direct rise in oil and gas prices that increases costs for households and businesses. These pressures then spread across supply chains within a few quarters, raising prices in sectors such as transport, food, and metals. A further phase may emerge if trade disruptions intensify, creating bottlenecks in imports, S&P Global said in a report.

Middle East tensions are renewing energy risks for Europe, pushing up oil and gas prices and lifting inflation towards 3-3.5 per cent.
The EU imports about $110 billion from the region, with key supply chains exposed via the Strait of Hormuz.
While less vulnerable than in 2022, rising costs, supply disruptions, and tighter monetary policy could weigh on growth and confidence.

Europe’s exposure to the Middle East remains significant, with the EU importing around $110 billion worth of goods annually from the region, accounting for about 4 per cent of total imports. Nearly half of this comes from Saudi Arabia and Iraq, while about $40 billion in non-energy goods depend on safe passage through the Strait of Hormuz, a key global shipping route.

The impact is already visible in prices. Eurozone inflation is expected to rise to 3-3.5 per cent in April, up from 2.6 per cent in March, as higher energy costs filter into consumer prices. Business surveys indicate that companies are raising selling price expectations, signalling broader inflationary pressures beyond energy markets. Central banks may respond with tighter monetary policy, increasing borrowing costs and potentially dampening economic confidence, the report mentioned.

Europe’s energy structure presents a mixed picture. The region imports nearly two-thirds of its energy, with around 14 per cent sourced from the Middle East. Germany and Italy remain particularly exposed due to limited domestic resources, while France benefits from its nuclear capacity and the UK is relatively less dependent on Middle Eastern supplies. Overall, Europe’s vulnerability is lower than in 2022, when Russia accounted for up to 35 per cent of energy needs.

Supply chain risks are also emerging. Although energy shipments continue to reach major ports such as Rotterdam and Antwerp, critical dependencies remain. Products such as cyclohexane, polypropylene, polyethylene, and aluminium rely heavily on Middle Eastern supply routes, particularly through the Strait of Hormuz. Disruptions could affect industries ranging from packaging and petrochemicals to automotive and construction.

While some resilience exists, including alternative shipping routes from Saudi Arabia, analysts caution that supply chains are only as strong as their weakest link. Prolonged disruption in energy and trade flows could amplify economic strain across Europe in the months ahead, added the report.

Fibre2Fashion News Desk (SG)

Bangladesh and Ethiopia recently stressed the need to strengthen bilateral ties, focusing on trade, investment and sectoral cooperation, as the former’s Foreign Minister Khalilur Rahman met the latter’s President Taye Atskeselassie Made in Addis Ababa.

They discussed ways to enhance cooperation in trade, investment, education, agriculture and cultural exchanges.

Bangladesh and Ethiopia recently stressed the need to strengthen bilateral ties, focusing on trade, investment, and sectoral cooperation, as the former’s Foreign Minister Khalilur Rahman met the latter’s President Taye Atskeselassie Made in Addis Ababa.
They discussed ways to enhance cooperation in trade, investment, education and agriculture.
Welcomed investment from Bangladesh in Ethiopia.

Adviser to Bangladesh Prime Minister for foreign affairs Humayun Kabir was present at the meeting.

Rahman stressed on expanding economic engagement and identified potential areas of cooperation that include readymade garments, pharmaceuticals and jute products. He requested Ethiopia to open its embassy in Dhaka to further strengthen ties.

Made welcomed investment from Bangladesh in Ethiopia, especially in the garments and pharmaceutical sectors, and stressed the need for closer interaction between the business communities of the two countries, according to a Bangladesh news agency.

Fibre2Fashion News Desk (DS)