IEA warns Southeast Asia’s Iran-war import bill could triple to $245B by 2035

The Iran war did more than rattle global oil markets. It exposed Southeast Asia’s core energy vulnerability: an overreliance on oil and gas transported through the Strait of Hormuz, according to a new International Energy Agency report released Tuesday. The IEA calls it a “stark wake-up call” for energy security, and it puts a concrete price tag on what happens if the region moves too slowly.

The bill could soar. The IEA warns Southeast Asia’s energy import bill could rise to $245 billion by 2035, tripling from $80 billion in 2024. That is the headline stake for executives because it is not just an energy story. It is a macro and balance-sheet story. Higher import bills mean higher energy costs, and the report links the shock to higher energy bills and rising inflation as Southeast Asia entered “energy triage” after the conflict.

Here is the uncomfortable part for governments and boards: the IEA report says the shock is spurring change, but it also shows how hard it is to unwind fossil fuel dependence quickly. In a likely setback for phasing out fossil fuels, the conflict reinforced the need to rely on coal during times of energy crisis. That is a second-order governance problem. Even when leaders want to accelerate cleaner energy, system reliability and price spikes can pull decision-makers back toward the quickest dispatchable options.

At the same time, the IEA points to visible demand and investment shifts that are already underway, especially where policy and consumers can move faster than mega-project construction. The report notes rising sales of electric vehicles, renewed interest in nuclear power, and a boom in rooftop solar and other renewable energy installations. The logic is simple: when import-linked prices jump, the economics of local generation and electrified transport improve, even if policy frameworks lag.

The Philippines is a useful example of the “do-it-yourself” dynamic described by the IEA. The country declared a national energy emergency, and consumers turned to rooftop solar at record rates to deal with higher utility bills. The IEA also found that the Philippines became the second-largest destination for Chinese solar exports in the first quarter of 2026, with imports around three times higher than the same period last year. That matters for executives because it signals a shift not only in energy generation, but in procurement and supply-chain flows. When imports surge, so do questions about grid integration, permitting timelines, and how utilities plan for distributed power.

Transportation is moving too, and it is doing so in a way that can change long-term import demand. The IEA says electric vehicle sales more than doubled in 2025 to around half a million units, and that one in five cars sold regionally is electric. Regulatory pressure is showing up as well. Last month, Laos banned the import of fuel-powered vehicles for the rest of 2026 to cut oil imports and encourage the shift to EVs. These are policy signals that can accelerate clean energy deployment, but they also create operational work: charging networks, utility upgrades, and financing models all have to catch up.

Nuclear energy sits in the middle of the tradeoffs: it is politically attractive for energy security, but timelines are unforgiving. The IEA says the war is furthering plans for nuclear power in Southeast Asia, but construction and regulatory processes remain yearslong. Indonesia, Vietnam, and the Philippines may be furthest along, but their timelines are uncertain. For executives, the message is that nuclear is not a short-term hedge. It is a long-horizon bet that must survive leadership changes, regulatory scrutiny, and capital market conditions while the region navigates near-term price volatility.

The IEA’s recommendations aim directly at reducing weakness rather than just adding capacity. It says Southeast Asia needs to reduce overall demand for imported fossil fuels. That includes making national grids more efficient and boosting investment in all forms of renewable energy, such as solar, wind, hydro, and geothermal. It also recommends prioritizing regional energy sharing initiatives like the Association of Southeast Asian Nations Power Grid, framing the crisis as both a stress test and a catalyst. The report quotes Fatih Birol, IEA executive director, saying “Diversification of energy sources and supply routes is now a central priority.” It also includes Sue-Ern Tan, head of the IEA Regional Cooperation Centre in Singapore, warning that this energy shock is prompting not just short-term responses, but “a deeper reassessment of policy priorities and investment strategies by governments.”

One more reality check: even if the conflict ends, the IEA suggests the vulnerability does not disappear overnight. A likely tentative deal to end the Iran war does not automatically bring fossil fuel prices down to pre-shock levels, and Sam Reynolds of the U.S.-based Institute for Energy Economics and Financial Analysis, or IEEFA, says that means a push toward more ambitious clean energy deployment. The strategic stake for other executives in the region is clear: if energy security planning stays stuck in incremental timelines, the region may pay for that delay through the import bill jump the IEA projected.