Israel-Iran conflict highlights Asia’s energy vulnerability

Israeli airstrikes on Iran.

HANOI, June 27 (AP/UNB) -The recent conflict between Israel and Iran has underscored Asia's heavy dependence on oil and gas from the Middle East, exposing the region to potential energy supply disruptions, experts say.

The Strait of Hormuz, which borders Iran, is a critical chokepoint for global energy shipments, handling roughly 20% of the world’s oil and liquefied natural gas (LNG) trade. Four Asian countries — China, India, Japan, and South Korea — account for 75% of these imports, according to research by Zero Carbon Analytics, as reported by AP.

Japan and South Korea are considered the most vulnerable, followed by India and China, largely due to their slower transition to renewable energy sources.

In 2023, renewable energy accounted for just 9% of South Korea's electricity mix, far below the 33% average among member countries of the Organization for Economic Cooperation and Development (OECD). Japan, meanwhile, remains the most reliant on fossil fuels among the Group of Seven (G7) nations.

Although a truce appears to be holding after the recent 12-day Israel-Iran war, analysts say the only long-term solution for Asia is to accelerate the transition to clean, domestic energy sources.

“These are very real risks that countries should be alive to - and should be thinking about in terms of their energy and economic security,” said Murray Worthy, a research analyst at Zero Carbon Analytics.

Japan, South Korea most at risk

While China and India are the largest importers of oil and LNG passing through the Strait of Hormuz, Japan and South Korea face greater vulnerability due to their higher dependency on imported fossil fuels. Japan imports 87% of its total energy needs, and South Korea 81%, compared to 20% for China and 35% for India, according to the global energy think tank Ember.

“When you bring that together — the share of energy coming through the strait and how much oil and gas they rely on — that’s where you see Japan really rise to the top in terms of vulnerability,” Worthy explained.

Three-quarters of Japan’s oil imports and over 70% of South Korea’s oil imports, along with about a fifth of its LNG, pass through the strait, said Sam Reynolds of the Institute for Energy Economics and Financial Analysis (IEEFA). Both countries have focused more on diversifying their fossil fuel supply chains rather than transitioning to renewable energy.

Japan plans to rely on fossil fuels for 30-40% of its energy mix by 2040, with ongoing construction of new LNG facilities. South Korea plans to reduce LNG's share in its electricity generation from 28% today to 25.1% by 2030, and further down to 10.6% by 2038.

However, experts say both countries need to dramatically ramp up renewable energy capacity to meet their 2050 net-zero targets. Think tank Agora Energiewende estimates Japan must add 9 gigawatts of solar power and 5 gigawatts of wind power annually by 2030, while South Korea requires similar solar capacity growth and an additional 6 gigawatts of wind power each year.

Japan’s energy policies remain inconsistent, with continued subsidies for gasoline and diesel, increased LNG import plans, and support for overseas oil and gas projects. Regulatory hurdles have also slowed offshore wind development.

“Has Japan done enough? No, they haven’t. And what they do is not really the best,” said Tim Daiss of APAC Energy Consultancy, citing Japan’s strategy to expand hydrogen fuel use, much of which is produced from natural gas.

In South Korea, low electricity prices discourage investment in renewable energy projects, a “key factor” limiting the expansion of solar and wind, according to Kwanghee Yeom of Agora Energiewende. He called for fair energy pricing, stronger policy support, and structural reforms to boost clean energy development.

China and India making progress, but challenges remain

China and India have taken more aggressive steps to insulate themselves from global energy market disruptions.

China led global renewable energy growth in 2024, increasing wind power capacity by 45% and solar power by 18%. It has also expanded domestic gas production, though reserves are depleting. While China remains the world’s largest oil importer, nearly half of its 11 million barrels per day come from the Middle East, with Russia and Malaysia among other key suppliers.

India, meanwhile, continues to rely heavily on coal, with plans to increase coal production by 42% by 2030. Nonetheless, renewable energy is expanding rapidly, with an additional 30 gigawatts of clean power capacity added last year — enough to supply nearly 18 million homes.

India has also diversified its oil sources, increasing imports from the U.S., Russia, and other Middle Eastern nations to mitigate risks.

“But India still needs a huge push on renewables if it wants to be truly energy secure,” said Vibhuti Garg of IEEFA.

Southeast Asia also exposed

A potential blockade of the Strait of Hormuz would affect energy supplies across Asia, making renewable energy development a “crucial hedge” against oil and gas market volatility, Reynolds of IEEFA warned.

Southeast Asia has already become a net oil importer as demand in Indonesia and Malaysia surpasses domestic production, according to the ASEAN Centre for Energy. While the region remains a net LNG exporter — thanks to Brunei, Indonesia, Malaysia, and Myanmar — rising consumption means ASEAN is projected to become a net LNG importer by 2032, consulting firm Wood Mackenzie forecasts.

At the same time, renewable energy deployment is struggling to keep pace with demand growth, and oil and gas production is declining as older fields mature.

The International Energy Agency (IEA) has warned that without stronger clean energy policies, ASEAN’s oil import bill could surge from $130 billion this year to over $200 billion by 2050.

“Clean energy is not just an imperative for the climate — it’s an imperative for national energy security,” Reynolds emphasized.