IEA Warns Southeast Asia Over Reliance on Middle East Oil

Governments across the region have scrambled to shield consumers from surging energy prices through fuel subsidies and financial aid. While these measures offer temporary relief, they impose a heavy fiscal burden. Prior to the recent escalation, the region already spent roughly $40 billion annually on fuel subsidies, a cost expected to climb sharply. According to AMRO Deputy Director Abdurohman, public finances are showing early signs of strain as higher energy costs and tightening financing conditions begin to weigh on regional fiscal stability.

The IEA projects that without structural intervention, Southeast Asia’s annual energy import bill could balloon from $80 billion in 2024 to $245 billion by 2035. Transitioning to renewables offers a potential path to fiscal relief, as the agency estimates that clean-energy investments since 2015 have already saved the region $30 billion in import costs. However, current inflationary pressures complicate this shift; as central banks raise interest rates to combat inflation, the cost of capital—already twice as high in Southeast Asia as in China or advanced economies—rises, hindering investment in capital-intensive green technologies. To insulate the region from future volatility, the IEA argues for aggressive regulatory reform and increased international support to lower these financing hurdles.