Middle East Crisis Accelerates Asia's Electrification Drive
Asia’s first knee-jerk reaction to the shock loss of crude supply from the Middle East was to fire up coal power plants, save fuel, and scour the global markets for alternative oil deliveries.
While the Iran war and the Strait of Hormuz crisis prompted immediate measures to reduce oil and gas consumption, the quiet electrification revolution across South and Southeast Asia – outside of the headline-grabbing Chinese renewables and EV boom – is now gaining momentum.
Asia felt the current crisis first, and it hit hard.
Iran Crisis Prompts Energy Security Drive
Refiners slashed run rates, many countries banned fuel exports, and some others declared emergencies and brought back the work-from-home policies from the Covid times.
With fuel prices spiking and shortages imminent, Asia is now looking at a major long-term structural change in its energy mix, with homegrown renewables and accelerated electric vehicle adoption reducing dependence on oil and gas.
Energy security became even more important than ever before as Asian nations struggle with soaring import bills to procure fossil fuels.
The crisis is a wake-up call for all Asian governments to speed up electrification in transport and power generation, analysts and climate campaigners say.
EV Sales Soar
The sudden loss of crude supply from the Strait of Hormuz and the subsequent spike in fuel prices have prompted consumers across Asia to turn to electric vehicles. China’s EV makers are major beneficiaries of the renewed drive for electrification, with sales in South and Southeast Asia soaring over the past two months.
To be sure, Southeast Asia was already leading the global EV adoption even before the Iran war.
Countries of the Association of Southeast Asian Nations (ASEAN) bloc have the highest EV sales penetration of any country in the world, an analysis by energy think tank Ember showed in December 2025, two months before the war in the Middle East rattled energy markets. Related: Pakistan PM: Oil Import Costs Up 167% Since Iran War Began
The share of EVs in new passenger car sales in countries like Singapore, Vietnam, Thailand, and Indonesia now exceeds legacy automotive markets like the U.S., the EU, and the UK.
“The assumption that EV growth will stall outside Europe and China is already outdated. Emerging markets will shape the future of the global car market,” Euan Graham, Electricity and Data Analyst at Ember, said in December.
Following the major supply shock in March and April, EV sales are accelerating across all markets, and so are installations and plans for capacity additions of solar and wind generation in Asia.
The oil and gas crisis exposed Asia’s vulnerability to depend on fossil fuel imports for most of its consumption. With the Strait of Hormuz no longer considered a reliable energy supply route, Asia faces its “Ukraine moment,” the one that Europe had to wake up to four years ago, when Russian pipeline gas deliveries were cut off for most European customers following the Russian invasion of Ukraine.
“Asia’s oil vulnerability has been exposed by the current crisis. This is Asia’s Ukraine moment,” Daan Walter, Principal at Ember, said last month.
“Unlike the oil crises of the 1970s, there is now a better alternative. Electric vehicles are increasingly cost-competitive with gasoline cars,” Walter added.
“Oil volatility means EVs are a common-sense choice for countries wishing to insulate themselves from future shocks.”
Renewables and Batteries Set to Surge
Renewable electricity and battery electric storage systems (BESS) are also gaining prominence amid the current oil and gas supply shock.
Installations of BESS in Asia, including China, are expected to jump over the next decade, Reuters columnist Clyde Russell notes, citing forecasts by Fastmarkets at the recent Asia Battery Raw Materials & Recycling Conference in Hanoi.
Globally, BESS capacity additions are set to jump ninefold between 2025 and 2036, per Fastmarkets projections.
The second energy crisis in four years is now accelerating the global drive toward electrification, especially in Asia, the region worst hit by the Strait of Hormuz closure.
Compared to the oil shocks of the 1970s, this energy crisis offers alternatives to replace some of the fossil fuels in energy consumption and reduce dependence on uncertain oil and gas supply amid geopolitical upheavals.
“Electrotech today is cheaper, faster and more secure, bringing with it irreversible consequences for an even bigger segment of fossil demand,” analysts at Ember said earlier this month.
The implications of the current crisis would be that Asia will fast-track electrification, and oil demand for road transportation would ease.
“Replacing oil imports for road transport with EVs could save importers over $600 billion a year – the single largest lever any country has to cut its import bill,” Ember’s analyst said.
“The sector that drove oil demand growth for decades is now set to drive its decline.”
The LNG growth story in Asia is also being questioned as the lack of supply from the Middle East, and Qatar’s expected multi-year recovery to full capacity and delays in new capacity slashed LNG imports into Asia in recent weeks.
For the first time, low-cost alternatives to oil and gas exist at scale, Ember argues.
“The question is whether governments build forward to the electric age or reach back to patch up the fossil one,” the analysts say.
By Tsvetana Paraskova for Oilprice.com