IEA warns SE Asia energy import bill could reach $245B as Iran war inflates costs, spurs inflation

The IEA’s $245 billion import bill projection is a red flag for any portfolio with exposure to Southeast Asian sovereign debt, currencies, or equities. At $80 billion in 2024, energy imports already represent a significant drain; a tripling implies that by 2035, energy could consume an unsustainable share of GDP, pushing current account deficits wider and forcing central banks to tighten into slowing growth. The Philippines’ energy emergency and rising coal usage signal a stagflationary undercurrent. However, markets punish inertia and reward adaptation — the report also points to policy catalysts for nuclear, solar, and EVs, where early investors in infrastructure and technology could see outsized returns. For finance professionals, this is a moment to price risk and find asymmetric bets in the transition.

The International Energy Agency’s latest report, released on June 16, 2026, delivers an urgent wake-up call to Southeast Asia: the ongoing Iran war has exposed the region’s extreme vulnerability to energy supply disruptions, with potential costs that could cripple national budgets and fuel inflation for a decade. The core of the problem lies in the Strait of Hormuz, through which much of Southeast Asia’s imported oil and gas transits. The conflict has transformed a long-recognized chokepoint risk into a live, costly reality, forcing governments into emergency measures and consumers into a scramble for alternatives.

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If current trends persist without major diversification, that figure could balloon to $245 billion by 2035 – a 206% increase that would siphon capital away from infrastructure, healthcare, and education.

The numbers frame the urgency. In 2024, the region’s energy import bill stood at $80 billion. If current trends persist without major diversification, that figure could balloon to $245 billion by 2035 – a 206% increase that would siphon capital away from infrastructure, healthcare, and education. The IEA describes the situation as ‘energy triage,’ with higher bills and rising inflation already biting. In the Philippines, the government declared a national energy emergency, and households turned to rooftop solar at record rates to shield themselves from soaring utility costs. Ivan Cano of EcoSolutions called the demand shock ‘the first time I’ve seen [one] of this magnitude.’

While the crisis is forcing a deeper reassessment of energy strategies, the short-term response has been mixed for the green transition. The IEA notes encouraging signs: electric vehicle sales are climbing, interest in nuclear power is reviving in Indonesia, Vietnam, and the Philippines, and distributed solar is booming. However, the same report warns that the conflict has ‘reinforced the need to rely on coal during times of energy crisis’ – a setback for decarbonization that could lock in high-emitting capacity for years. The Philippines, which has abundant coal plants, illustrates the tension: emergency measures may extend the life of assets the region needs to retire to meet climate goals.