The Middle East conflict impacts developing countries or accelerates the pace of energy transition

The Philippines announced the country has entered a state of energy emergency, people in various parts of India are queuing to buy gas cylinders, a large number of vehicles at Bangkok’s Suvarnabhumi Airport in Thailand have suspended operations, energy prices in Chile have surged significantly, and fuel station operators in Ethiopia are “stockpiling” fuel… Recently, the energy crisis triggered by Middle East conflicts has brought severe livelihood challenges to many developing countries, increasing economic development risks, and also prompting many nations to consider accelerating energy transition and promoting green transformation processes.

Livelihood Difficulties: Severe Challenges Are Imminent

At the end of March, the Philippines declared a state of energy emergency nationwide. Driven by rising fuel prices, Cebu Pacific and Philippine Airlines announced the suspension of some flights, and several large supermarkets chose to shorten operating hours to reduce energy consumption.

In Mumbai, India, starting from early March, about one-fifth of hotels and restaurants have been fully or partially closed. Queues for purchasing gas cylinders have also appeared across the country. The Indian energy sector stated that the supply of cooking fuel for over 333 million Indian households is under threat, and the government has been forced to implement rationing and conservation measures.

At Bangkok’s Suvarnabhumi Airport in Thailand, taxi services have been impacted by fuel shortages, with many vehicles suspending operations, especially affecting long-distance travel. Thai domestic airlines have raised ticket prices in an attempt to offset the rising fuel costs.

In Laos, the government has stabilized fuel prices through measures such as reducing fuel consumption taxes and providing subsidies; encouraging the use of electric vehicles, lowering import tariffs on electric vehicles, reducing electric vehicle service fees by 30%, and increasing costs related to fuel vehicles by 30%; and reducing school weekly classes from five days to three.

In Chile, fuel prices have recently surged sharply, with gasoline increasing by about 30%, and diesel by 50% to 60%, with even higher increases in remote and island areas, directly raising costs for residents’ travel, heating, and logistics.

In Africa, fuel prices have soared in countries like Ethiopia. The Chairman of Libya’s Presidential Council, Mamnfi, has called on the national oil company to halt signing new agreements related to oil fields in production.

Economic Risks: Multi-layered Damage Could Trigger Social Unrest

International observers believe that the energy crisis caused by Middle East conflicts is severely impacting the economic pillars of developing countries, pushing up inflation expectations, threatening food security, worsening fiscal conditions, and increasing the risk of financial market turbulence.

Recent statistics from Thailand’s Ministry of Tourism and Sports show that from January 1 to March 11, 2026, the number of tourists received by Thailand decreased by 4.4% compared to the same period in 2025. The Thai Chamber of Commerce University predicts that if the Middle East conflict continues for three months, Thailand could face losses of approximately 20 billion Thai Baht (about $614 million).

The Chilean government states that worsening fiscal conditions have squeezed policy flexibility. Under the backdrop of high international oil prices, the government faces a dilemma between “stabilizing prices” and “maintaining fiscal stability.” Francisco Castañeda, an economist at the Central University of Chile, told Xinhua that this round of price increases “is causing problems across all production chains in Chile, especially in mining, construction, and agriculture—industries that rely heavily on energy inputs,” and warned that “ultimately, higher costs will be borne by enterprises.”

Rwandan economic analyst Stratton Habyalimana said, “If the energy crisis persists, imported inflation pressures, along with soaring transportation and food prices, will impact the entire African region.”

Affected by rising energy prices, Goldman Sachs recently further downgraded India’s 2026 economic growth forecast to 5.9%, warning that this year India will face slowing economic growth, rising inflation, and currency depreciation pressures.

Research fellow Parul Bakhshi of the Middle East branch of the Indian think tank Observer Foundation wrote that the blockage of the Strait of Hormuz has an especially significant impact on India’s economy. Experts believe that India’s liquefied petroleum gas (LPG), mainly used for domestic purposes, is critical for household food security, and any disruption in supply could become a trigger for social unrest in India.

Response Strategies: Seeking Diversification of Imports or Accelerating Energy Transition

Experts believe that in the face of current energy difficulties, many developing countries are either seeking to diversify energy imports or considering accelerating domestic energy transition to reduce structural dependence on fossil fuels, with renewable energy transition likely gaining new momentum.

Bakhshi suggests that India needs to adopt multiple measures to address its energy supply vulnerabilities, including promoting diversification of energy sources, expanding reserves, upgrading infrastructure, and accelerating energy transition. In the long term, expanding storage infrastructure for LPG and liquefied natural gas (LNG) can provide important buffers against energy disruptions. Additionally, speeding up India’s domestic energy restructuring to reduce dependence on imported fossil fuels is crucial.

In response to energy shortages, the Philippines is eager to broaden import channels. Senior columnist Li Tianrong of The Philippine Star believes that the country urgently needs to attract foreign investment into solar energy, battery storage, and electric vehicle manufacturing, to deeply integrate into the global green supply chain.

Fatih Birol, Director of the International Energy Agency, predicts that this energy crisis will prompt governments worldwide to initiate a new round of policy adjustments. He believes that the transition to renewable energy will gain new momentum, nuclear power will be re-emphasized, and the electric vehicle industry will be promoted, but at the same time, there will be a renewed reliance on coal rather than natural gas.

Source: Xinhua News Agency

Author: Yan Liang