U.S. guarantees have not shielded Indonesia, the Philippines, and Vietnam from economic shock.
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When Philippine President Ferdinand Marcos Jr. declared a national energy emergency in late March, he exposed a problem Washington prefers not to see: The U.S. security umbrella does not automatically protect Southeast Asia from the economic fallout of conflict escalation in the Persian Gulf. A country thousands of miles from the Strait of Hormuz was suddenly scrambling to secure fuel, calm domestic pressures, and protect its economy from a conflict it did not start and could not influence. Philippine officials said at the time that the country had about 45 days of fuel reserves and was seeking an additional 1 million barrels to build buffer stock. That is now the condition of much of Southeast Asia.
The Iran war is often described as an energy shock, and of course it is. But the real question is, which states still retain enough agency under exposure to absorb the shock, rebalance their dependencies, and avoid being pushed deeper into one great-power orbit or the other? The disruption extends beyond crude. Naphtha, liquefied petroleum gas, and refined products moving through Hormuz feed directly into Southeast Asia’s petrochemical and agricultural supply chains, narrowing the policy tools available to governments trying to adjust to the new reality. The International Monetary Fund (IMF) has warned that Asia is more vulnerable than other regions to a prolonged war-induced energy shock because of its heavy dependence on Middle Eastern fuel. Exposure is widespread. Agency is not.
When Philippine President Ferdinand Marcos Jr. declared a national energy emergency in late March, he exposed a problem Washington prefers not to see: The U.S. security umbrella does not automatically protect Southeast Asia from the economic fallout of conflict escalation in the Persian Gulf. A country thousands of miles from the Strait of Hormuz was suddenly scrambling to secure fuel, calm domestic pressures, and protect its economy from a conflict it did not start and could not influence. Philippine officials said at the time that the country had about 45 days of fuel reserves and was seeking an additional 1 million barrels to build buffer stock. That is now the condition of much of Southeast Asia.
The Iran war is often described as an energy shock, and of course it is. But the real question is, which states still retain enough agency under exposure to absorb the shock, rebalance their dependencies, and avoid being pushed deeper into one great-power orbit or the other? The disruption extends beyond crude. Naphtha, liquefied petroleum gas, and refined products moving through Hormuz feed directly into Southeast Asia’s petrochemical and agricultural supply chains, narrowing the policy tools available to governments trying to adjust to the new reality. The International Monetary Fund (IMF) has warned that Asia is more vulnerable than other regions to a prolonged war-induced energy shock because of its heavy dependence on Middle Eastern fuel. Exposure is widespread. Agency is not.
That is why Southeast Asia matters as more than a regional economic story. It is one of the world’s clearest theaters of constrained agency: a region of treaty allies, manufacturing hubs, maritime front lines, energy importers, and trade-dependent states with very different levels of resilience. Security leans toward Washington. Economic gravity leans toward Beijing. The 2026 State of Southeast Asia survey by the ISEAS Yusof Ishak Institute in Singapore captured that discomfort neatly: If forced to choose, 52 percent of respondents said they would side with China over the United States. That is not a vote for Chinese primacy. It is evidence of a region still trying to preserve policy space between two powers it cannot avoid.
The deeper danger is not only scarcity. It is precedent. If coercive bargaining over Hormuz becomes normalized, the logic does not stay in the Gulf. It travels east—to the Strait of Malacca, accounting for nearly 22 percent of global trade; to the Sunda and Lombok alternatives; and to the wider maritime architecture on which Asian prosperity depends. In 2025, more than 102,500 ships transited Malacca, carrying 29 percent of maritime oil in just the first half of the year. Singapore’s insistence that passage through Hormuz is a nonnegotiable right is therefore not legal formalism. It is strategic preemption. What is being tested is not just supply resilience but whether chokepoints themselves become accepted instruments of leverage in an age of weakening restraint.
The Philippines sits at one of the narrowest points on this spectrum. Highly exposed to the social and economic fallout of the Hormuz shock, closely tied to Washington in security terms, and under constant maritime pressure from China, Manila must manage rising domestic costs from a distant war even as its strategic options remain compressed by geography, alliance commitments, and the realities of the South China Sea. The irony runs deeper than it first appears. Closer integration into U.S. military planning for the Indo-Pacific—the expanded access arrangements and operational cooperation that make the Philippines strategically central to U.S. strategy—does not insulate Manila from the economic shocks that strategy cannot cushion. It may actually narrow the hedging options that might otherwise soften them. The United States may help the Philippines defend reefs, but reefs do not power factories, move jeepneys, or stabilize food prices. Shortly after his March announcement, Marcos activated a $333 million emergency fund to strengthen fuel security and urged fellow members of the Association of Southeast Asian Nations (ASEAN) to test the group’s dormant fuel-sharing arrangements. Narrow agency can still produce improvisation—but it remains narrow.
Vietnam represents a different, and in some ways more revealing, form of constrained agency. Less tightly bound to Washington than the Philippines and less visibly compressed by alliance politics, Hanoi still confronts the shock as an export-manufacturing state acutely sensitive to disruptions in fuel, logistics, and industrial inputs. What makes Vietnam analytically important is the way hedging can harden into selective embrace without becoming submission. During To Lam’s April visit to China, Beijing offered loans, technology, and connectivity investment. The two sides signed 32 agreements and elevated the language of strategic ties. This does not amount to abandoning autonomy. It suggests something subtler. In a world of erratic U.S. signals, Hanoi is thickening selected ties with China as insurance while still preventing either Beijing or Washington from foreclosing its options. What makes Vietnam strategically useful to Washington is also what limits Washington’s leverage: Hanoi’s refusal of formal alignment. Vietnam’s agency lies not in escaping the China question, which it cannot do, but in calibrating proximity without surrendering strategic discretion.
Indonesia enters the same crisis with more scale, more diplomatic ballast, and a somewhat wider margin of adjustment. Jakarta may need up to $5.9 billion in additional energy subsidies this year because of the war, yet its significance lies in something more than vulnerability. It is one of the few states in the region with enough size, fiscal capacity, and strategic habit to turn exposure into policy rather than simply into pain. The new U.S.-Indonesia Major Defense Cooperation Partnership announced in April—covering maritime, subsurface, and autonomous systems domains—thickens the habits and logistics that would matter if access through Southeast Asia’s maritime chokepoints ever came under pressure. But Indonesia is not becoming Washington’s protectorate or mutual defense treaty ally. It is expanding its strategic options without allowing those options to harden into formal alignment.
Taken together, these cases reveal that the relevant divide in Southeast Asia is not between exposed and secure states—there are almost none of the latter—or between states leaning toward Washington and states leaning toward Beijing. The more important distinction is between states whose agency remains politically meaningful and states whose agency is being squeezed from both sides simultaneously. The Philippines shows compressed agency under alliance dependence and Chinese pressure. Vietnam shows calibrated proximity, preserving autonomy through selective deepening of ties. Indonesia shows how scale and ballast can widen the usable policy range without eliminating vulnerability.
For Washington, that is the real warning. U.S. Defense Secretary Pete Hegseth’s reported remarks—telling allies to stop talking and “get in a boat” and insisting that “the time for free-riding is over”—are not merely burden-sharing rhetoric. They point to a harder U.S. view now coming into focus: Allies are expected to show more resolve, bear more risk, and contribute more, even when the shock they are absorbing was not of their making. The logic is coherent on paper. What the Hormuz shock reveals is its blind spot. The stress test Washington’s framework anticipates comes from Chinese pressure, not from the economic spillovers of U.S. crisis escalation. When the source of instability is U.S. action rather than Chinese aggression, that framework offers allies no cushion—only an additional demand.
The Iran war will not push Southeast Asia into China’s arms. But it will deepen a quieter regional instinct: to preserve cooperation with the United States while reducing exposure to the spillovers of its crisis management. More hedging, more diversification, more resistance to strategic overcommitment. This is not anti-Americanism. It is the logic of survival.
A security umbrella that does not help protect agency will thin politically over time. The question is no longer who offers the stronger deterrent. It is who helps preserve the capacity to maneuver when shocks arrive, chokepoints are politicized, and neither pole can be trusted to keep the commons open.
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Alejandro Reyes is an adjunct professor and senior fellow at the Centre on Contemporary China and the World at the University of Hong Kong. He is also a scholar-in-residence at the Asia Society Hong Kong Center.
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