26 March 2026 | 13:24 CAT
3-minute read

US-Israel war on Iran drives up gas prices , China’s role and EV market shift
The US-Israel war on Iran has caused severe economic shocks in the Asia-Pacific region through surging oil prices, shipping disruptions, and supply chain bottlenecks. Regional energy security is threatened by the blockade of the Strait of Hormuz, while concerns of reduced US military focus create security anxieties in East Asia.

The closure of the Strait of Hormuz has halted 20% of global liquefied natural gas and massive oil shipments, forcing countries like China to scramble for alternatives and causing energy price inflation across the region.

During this week’s Asia Pacific Report, Professor of Sociology at the University of New York, Walden Bello explained that Asia Pacific relies heavily on the Strait of Hormuz, with approximately 84% of the crude oil and condensate, and 83% of the liquefied natural gas (LNG) passing through it destined for Asian markets.

“Gas prices have been going up by 20 to 30%. Diesel has really skyrocketed about 75% since February 28. The most vulnerable country in Southeast Asia, for instance, is in the Philippines. Ninety percent of its oil comes from the Persian Gulf,” Professor Bello said.

In response, Japan announced in March 2026 that it began releasing oil from its strategic national reserves, along with private-sector stockpiles, while South Korea is temporarily accelerating its reliance on coal and boosting nuclear power to over 80% utilisation.

Meanwhile, as of this month, China has implemented a ban on refined fuel exports—including gasoline, diesel, and aviation fuel—to prioritise domestic supply, and India has secured safe passage for its oil and LPG ships through the Strait of Hormuz, with Iran allowing Indian vessels to pass during the current regional conflict.

Philippine President Ferdinand Marcos Jr. has ordered a temporary 4-day workweek for select government executive offices starting March 9, 2026, to conserve energy and reduce fuel consumption during rising oil prices. The schedule often involves 10-hour days from Monday to Thursday, reducing in-person work and increasing remote work to save energy.

The conversation shifted to China’s role in the conflict. China and Iran maintain a strategic, largely transactional partnership, driven by energy needs, economic cooperation, and shared opposition to US influence, rather than a formal military alliance.

However, China is not lending significant support to Iran because it prioritises regional stability for its economic interests, avoids getting entangled in foreign conflicts, and balances its ties with Iran against much larger, crucial economic partnerships with Saudi Arabia and the Gulf states.

“China’s main interests are its territorial conflicts with India and the South China Sea, with Philippines and other countries, and unification with Taiwan. So, its military forces are really geared regionally rather than extra regionally,” Professor Bello explained.

He also noted that Beijing appears to be taking a wait-and-see approach, closely monitoring developments while avoiding direct involvement. This stance may allow China to benefit strategically if the United States becomes increasingly entangled in “an unwinnable war”. Comparisons have been drawn to past US engagements in Afghanistan and Vietnam, with suggestions that China could gain geopolitical advantage without active participation.

At the same time, China has moved to safeguard its energy security, reportedly securing safe passage for oil shipments through the Gulf. The country remains partially dependent on the region, with approximately 13% of its oil imports sourced from the Gulf.

Beyond geopolitics, a significant industrial shift is underway across Southeast Asia, where Chinese electric vehicle (EV) manufacturers are rapidly gaining ground. In markets such as Thailand, Japanese automakers—once dominant with around 90% market share just five years ago—have seen their position decline to roughly 69%.

The shift has been attributed to differing strategic priorities. Japanese manufacturers continued to focus heavily on internal combustion engine vehicles, while Chinese firms invested aggressively in EV technology. This has enabled Chinese brands to capitalise on changing consumer preferences and rising fuel costs, trends likely to be reinforced by ongoing instability in global energy markets.

The growing presence of Chinese vehicles is increasingly visible in major Southeast Asian cities, including Manila and Bangkok, particularly on ride-hailing platforms such as Grab. Analysts describe this as part of a broader transformation in both manufacturing and consumer markets, marking a decisive shift toward electric mobility in the region.

Listen or watch to the Asia Pacific Report with Walden Bello on Sabaahul Muslim, hosted by Moulana Habib Bobat.