Middle Eastern conflict impacts developing countries or accelerates energy transition pace

(Source: China Electric Power News)

Reprinted from: China Electric Power News

Xinhua News Agency Beijing, April 7 – Title: Middle East Conflict Impacts Developing Countries or Accelerates Energy Transition Pace

The Philippines announced a state of energy emergency, gas cylinder lines formed across India, a large number of vehicles suspended operations at Bangkok Suvarnabhumi Airport, Chile’s energy prices surged significantly, Ethiopian gas stations stockpiled fuel… Recently, the energy crisis triggered by the Middle East conflict has posed severe livelihood challenges for many developing countries, increasing economic development risks, and also prompting many nations to consider accelerating energy transition and promoting green transformation processes.

Livelihood Challenges: Severe Threats Are Imminent

At the end of March, the Philippines declared a state of energy emergency. Driven by rising fuel prices, Cebu Pacific and Philippine Airlines announced suspensions of some flights, and several large supermarkets shortened 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. Long lines for gas cylinders appeared across the country. India’s energy sector stated that the fuel supply for over 333 million Indian households’ kitchens is under threat, forcing the government to implement rationing and conservation measures.

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

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

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

In Africa, fuel prices soared in countries like Ethiopia. Libyan President’s Council Chairman Manaf ordered the national oil company to cease signing new agreements related to oil fields in production.

Economic Risks: Multi-layered Damage May Trigger Social Unrest

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

Thailand’s Ministry of Tourism and Sports recently reported that from January 1 to March 11, 2026, the number of tourists received in 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 about 20 billion Thai Baht (approximately $614 million).

The Chilean government stated that worsening fiscal conditions have squeezed policy space, and amid high international oil prices, the government faces a dilemma of “stabilizing prices” versus “maintaining fiscal stability.” Francisco Castañeda, an economist at Chile’s Central University, told Xinhua that the recent price hikes “are causing problems across all production chains in Chile, especially in mining, construction, agriculture, and other energy-dependent industries,” warning 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 affect the entire African region.”

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

Paurul Bakshi, a researcher at 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. Observers believe that India’s liquefied petroleum gas (LPG), mainly used for domestic purposes, is critical for household food security, and any supply disruptions could trigger social unrest in India.

Response Strategies: Seeking Diversified Imports or Accelerating Energy Transition

Experts believe that in response to the current energy predicament, 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.

Bakshi believes 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.

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

Fattah Birol, Director of the International Energy Agency, predicts that this energy crisis will trigger a new round of policy adjustments worldwide. 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 increased use of coal instead of natural gas.

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