Energy & resources, explained.
Farmers clear their rice fields in Nakhon Sawan province, north of Bangkok, Thailand (Chaiwat Subprasom via Getty Images)
Asia consumes 80% of Hormuz oil and gas flows – the region’s food and energy systems are one crisis, not two.
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When the tankers stop, the tractors stopWhen the tankers stop, the tractors stop
For decades, the metric of success for the “Asian Miracle” has been the frantic movement of goods: the “just-in-time” supply chains, the burgeoning export volumes, and the rising GDP figures. But the war against Iran has stripped away these secondary layers of economic prestige. We have learned that if a nation cannot power its factories or feed its people, its “miracle” is merely a borrowed illusion. In the present crisis, energy and food security are no longer just line items in a budget, they are the very definition of national sovereignty.
The escalation of the conflict since 28 February has effectively imposed a “friction tax” on the regional economy. For years, Asia’s “world’s workshop” model relied on the assumption that energy and transport costs were negligible. That assumption died the moment the Strait of Hormuz closed. Because Asia consumes 38% of the world’s oil and 24% of its gas – 80% of which must pass through that single chokepoint – the region is more exposed than any other to the weaponisation of distance.
The most dangerous misconception is that energy and food are separate silos. In reality, they are a single, connected system. In the rice-farming heartlands of Cambodia, Myanmar, and Vietnam, energy is food. Diesel powers the irrigation pumps and the tractors; natural gas is the primary feedstock for urea and ammonia fertilisers.
A country can survive a dip in semiconductor exports, but it cannot survive a hungry populace.
When the Oman crude benchmark spikes, it doesn’t just hit the petrol pump but also the dinner table of Asian countries. Rising oil price shocks directly drive up agricultural food costs, with research indicating that energy market movements explain over 64% of the variance in food prices. This dependency demands diversification of energy sources within the agricultural sector to reduce the harmful effects of oil-led inflation.
The World Bank warns that disruptions to fertiliser trades are already fanning food price inflation across South Asia, where agriculture still accounts for up to 20% of GDP. This is why food security is the ultimate test of resilience: a country can survive a dip in semiconductor exports, but it cannot survive a hungry populace. The World Food Program warns that rising food and fuel prices could worsen global hunger among vulnerable populations.
The rising fuel and food crisis also represents a productivity trap. As the cost of essential inputs (fuel and fertilizer) outpaces the gains in output, the “friction” of production erases profit margins for small-scale farmers and global tech giants alike. Governments are currently attempting to subsidise their way out of this trap. Malaysia and India are spending billions to shield consumers, but these are quasi-fiscal gambles that erode the buffers needed for long-term survival. Governments cannot subsidise the physical absence of a fertiliser shipment or a tanker of Liquefied Natural Gas (LNG). By muting price signals, these measures forestall the only practical solution: a radical pivot toward domestic energy and food autonomy.
To safeguard Asia’s economic ascent, policymakers must move beyond the rhetoric of “political will” and commit to hard structural integration that addresses the region’s fundamental vulnerabilities. This begins with a “Proximity Pivot” to shorten the distance between energy processing and value creation. Rather than relying on fragile, transoceanic shipments of finished inputs, this model requires relocating refining and fertiliser production to the same sub-regional clusters as the farms and factories they serve.
The viability of this pivot is demonstrated by Vietnam’s Ca Mau Gas–Power–Fertiliser Complex, which has already supplied 11 million tonnes of fertiliser and 116 billion kWh of electricity, securing the Mekong Delta's agricultural backbone. This “localised-integrated” model, treating energy and food as a single, protected infrastructure, is gaining traction as nations seek to decouple survival from maritime chokepoints. Similarly, India’s national coal gasification mission in Odisha aims to reduce reliance on imported methanol by 90% by emulating China, the leader in gasification. Utilising inland resources can effectively bypass the “friction tax” of global spot markets.
Simultaneously, the regional safety net must be modernised by allowing vulnerable nations such as Nepal and Laos to repurpose a portion of multilateral loan portfolios toward “sovereign infrastructure”, including micro-grids and domestic food reserves, priortising domestic consumption. This builds upon the logic of the World Bank’s shift toward a 45% climate finance target for 2025–26, providing immediate fiscal space to protect local populations from global market volatility.
The 2026 shock has laid bare the fragility of a region that grew too fast and looked too far for its basic needs. The lights are flickering in the “world’s workshop” because we forgot that the workshop was built on the back of imported stability. True resilience doesn’t come from a high GDP; it comes from the certainty that the tractors will run, and the bowls will be full tomorrow morning.
About the author
Nischal Dhungel
Nischal Dhungel is PhD Student in the Department of Economics at the University of Utah and Fellow at the Nepal Institute for Policy Research.
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