Manila — The recent escalation of tensions in the Middle East, marked by U.S. and Israeli strikes on Iran and the resulting closure of the Strait of Hormuz, has underscored the vulnerability of Asian countries heavily reliant on Middle Eastern oil imports, with the Philippines emerging as one of the most affected.
In late February, when the vital maritime route was reportedly shut, the Philippines, which imports nearly all of its petroleum products, confronted immediate energy supply challenges. Rodela Romero, director for the oil sector at the Philippine Department of Energy, recalled the urgency as officials scrambled to secure alternative sources, often at significantly higher costs. The disruption led to gasoline prices doubling and diesel prices tripling, triggering transportation strikes in Manila and contributing to rapid inflation. In response, President Ferdinand Marcos Jr. declared a national energy emergency on March 24, marking the first such declaration amid the conflict’s economic fallout outside the Middle East.
The Philippines’ crisis is part of a broader regional strain as developing Asian economies grapple with the prolonged suppression of energy flows due to the conflict. Many rely extensively on Middle Eastern oil and natural gas, making them particularly susceptible to supply interruptions. Japan has stepped forward offering financial support and technical expertise to assist countries including the Philippines, Indonesia, Thailand, and Vietnam in developing strategic petroleum reserves—stockpiles intended to stabilize supply during future disruptions.
This push toward building reserves parallels historical efforts from the 1970s oil shocks, which led to the creation of the International Energy Agency (IEA) and imposed stockpile requirements on member nations. However, experts caution that while such reserves can enhance energy security, costs are substantial. The Philippines estimates it would cost around $500 million to establish a 90-day reserve. Additionally, crude oil’s shelf life and storage expenses add complexity to such initiatives.
Economic repercussions in the Philippines have been severe, particularly for daily wage earners. Floranda, national president of Piston, a labor coalition representing jeepney drivers in Manila, detailed the challenges faced by drivers, whose incomes have been insufficient to keep pace with soaring fuel prices. With diesel costs increasing, Piston petitioned the government to raise ride fares by 10 pesos per journey to cover expenses, though this remains under review.
A state-run think tank, the Philippine Institute for Development Studies (PIDS), warned that sustained crude prices around $105 per barrel could push over 1.3 million Filipinos into poverty. While crude prices have moderated recently, volatility remains high amid renewed fighting. PIDS senior research fellow Adoracion Navarro noted that inflationary pressures continue to ripple through the economy, affecting prices of essentials including food.
The Asian Development Bank (ADB) has revised down growth forecasts for Asia-Pacific developing economies, attributing the slowdown partly to elevated commodity costs. ADB’s chief economist in Manila, Albert Park, emphasized the need for a strategic approach, suggesting that increasing renewable energy investments might be a more cost-effective resilience measure compared to expensive oil stockpiling.
Japan’s former trade ministry official, Taro Han, highlighted Tokyo’s advocacy for reserves aligned with IEA standards to improve long-term energy security in the region. At the same time, PIDS advocates for a balanced strategy, proposing modest reserves coupled with investments in energy efficiency and infrastructure upgrades.
The Philippine government continues legislative deliberations to formalize a strategic petroleum reserve policy. The Department of Energy also aims to expand refining capacity to convert crude into usable petroleum products, a critical shortfall exposed when China suspended refined petroleum exports in March, intensifying supply vulnerabilities.
For officials like Ms. Romero, moments of crisis have been punctuated by the stark realities of dependency and limited options. Reflecting on initial alerts about supply cuts, she remarked that her immediate reaction was one of deep concern but also hope. “Otherwise, I would have just prayed,” she said. “Prayed for a miracle.”