MAY 15 — Even if the war in West Asia were to stop tomorrow, the world economy would not suddenly return to normal.The illusion ceasefire alone can instantly stabilize global...
! Plus, enjoy an additional FREE RM10 when you sign up using code VERSAMM10 with a min. cash-in of RM100 today. T&Cs apply. MAY 15 — Even if the war in West Asia were to stop tomorrow, the world economy would not suddenly return to normal.
The illusion ceasefire alone can instantly stabilize global energy markets misunderstands the deeper structural damage already inflicted upon the international system. Their economic aftershocks travel far beyond the battlefield and linger long after political leaders declare victory or ceasefire. At the center of this crisis remains the Strait of Hormuz. Roughly one-fifth of global oil flows move through this narrow maritime artery.
When uncertainty surrounds Hormuz, the world does not merely fear shortages of oil but it’s derivatives too. To be sure, energy markets are driven as much by psychology as by physical supply. All the prices now are actually based on how events will unfold two months from now. Known as spot prices.
Tanker operators, insurers, sovereign wealth funds, refiners and central banks all price in the risk. Even temporary disruptions can send shockwaves through futures markets because no shipping company wishes to expose billion-dollar cargoes to missile attacks, naval interception or drone warfare. To the degree there are some companies in the UAE willing to insure the cargoes, the situation still warrants too much concer for any traders to get into the business.
When uncertainty surrounds Hormuz, the world does not merely fear shortages of oil but it’s derivatives too. — Reuters file picInsurance premiums for tankers rarely decline immediately. Shipping firms continue to reroute vessels. Some refiners maintain emergency inventories instead of releasing them.
Investors fear renewed escalation. In effect, the market develops a memory of instability. East Asia and Southeast Asia remain heavily dependent on West Asian crude oil and LNG supplies. China, Japan, South Korea and much of ASEAN still derive energy imports from the Gulf region.
Any prolonged uncertainty surrounding Hormuz therefore reverberates directly through the economies of Asia. The Indo-Pacific may speak increasingly about digital transformation, artificial intelligence and semiconductor supremacy. Yet all these ambitions remain dependent on stable energy flows. Factories cannot operate on geopolitical rhetoric alone.
Liquefied natural gas markets tighten rapidly during crises. Fertilizer prices surge because ammonia and urea production rely heavily on stable hydrocarbon inputs. Shipping bottlenecks elevate freight costs across global supply chains. Even helium, critical to semiconductors and CT scans, becomes vulnerable when Gulf logistics are disrupted.
The result is not one isolated energy crisis, but an interconnected industrial shock affecting food, healthcare, manufacturing and technological sectors simultaneously. Since the pandemic, global markets have endured repeated systemic shocks: Covid-19, the Russia-Ukraine war, Red Sea disruptions, technological decoupling between the United States and China, and now prolonged instability in West Asia. They now see them as permanent features of the international landscape. The world economy is entering an era where strategic insecurity itself becomes embedded into pricing mechanisms.
Oil is no longer priced solely according to supply and demand. It is priced according to geopolitical survivability. Thailand has quietly increased energy purchases from the United States, Libya and Brunei. Japan and South Korea are strengthening strategic petroleum reserves.
China continues expanding overland pipeline systems and maritime redundancy under its broader energy security architecture. Yet diversification is neither simple nor immediate. Refineries are calibrated for specific crude blends. Shipping fleets cannot be reorganized instantly.
Long-term contracts must be renegotiated carefully. Infrastructure transitions require billions of dollars in financing and political coordination. Countries that subsidize fuel, including several ASEAN economies, may struggle to absorb prolonged energy volatility. Higher oil and gas prices quickly spill into transportation, electricity generation, food production and household inflation.
Central banks, meanwhile, fear that another prolonged energy shock could reverse fragile post-pandemic stabilization efforts. The issue is no longer simply whether the war ends. The issue is whether confidence in the continuity of global energy flows can be restored. And therein lies the deeper tragedy of the present moment.
The modern global economy was built upon the assumption that major sea lanes, energy routes and trading corridors would remain fundamentally secure under a broadly functioning international order. The world is therefore confronting not merely a temporary energy crisis, but a crisis of geopolitical predictability itself. For ASEAN and medium sized powers, the lesson is sobering. Strategic neutrality alone is insufficient without economic resilience.
Diversification, maritime security cooperation, strategic reserves and multilateral diplomacy are no longer optional policy tools. They are necessities of survival in an increasingly fractured world. The global energy system may eventually stabilize again. But the era of cheap assumptions about uninterrupted globalization has already ended.
Indeed, even if the war between US-Israel and Iran were to stop today, the damage on the international trading system is done. * Phar Kim Beng is a professor of Asean Studies and director of the Institute of Internationalisation and Asean Studies, International Islamic University of Malaysia. ** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
Liquefied Natural Gas Oil Prices Geopolitical Insecurity Energy Diversification ASEAN Economic Impact
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