{"id":755307,"date":"2026-06-23T15:37:17","date_gmt":"2026-06-23T15:37:17","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/755307\/"},"modified":"2026-06-23T15:37:17","modified_gmt":"2026-06-23T15:37:17","slug":"compound-shock-effect-why-the-middle-east-crisis-and-el-nino-could-spell-disaster-in-south-east-asia-el-nino-southern-oscillation","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/755307\/","title":{"rendered":"\u2018Compound shock effect\u2019: why the Middle East crisis and El Ni\u00f1o could spell disaster in south-east Asia | El Ni\u00f1o southern oscillation"},"content":{"rendered":"

When the US and Israel launched the war on Iran, south-east Asian nations were amongst the first and hardest hit<\/a>, as the closure of the strait of Hormuz<\/a> cut off supplies of energy and fertiliser.<\/p>\n

Governments across the region, heavily reliant on the waterway, raced to find ways to reduce their fuel use: in the Philippines<\/a>, many government workers were put on a four-day week. In Vietnam, employers were urged to allow staff to work from home. In Thailand, offices were urged to set air-conditioning units to 27C.<\/p>\n

South-east Asian governments last week expressed hope<\/a> that the Iran peace deal would bring freedom of navigation through the strait and economic stability.<\/p>\n

However, that optimism looks fragile as on Saturday Iran indicated it would close the strait<\/a> after Israeli strikes in Lebanon, and planned to introduce a system of maritime fees.<\/p>\n

Now, United Nations experts are warning of a \u201ccompound shock effect\u201d arising from the economic fallout from the conflict combined with looming \u201cGodzilla strength\u201d<\/a> El Ni\u00f1o conditions in Asia and the Pacific, which could put millions of tonnes of the world\u2019s food at risk.<\/p>\n

An owner waters his buffalo to keep them cool in Chonburi city, Thailand. Photograph: Peerapon Boonyakiat\/SOPA Images\/Shutterstock<\/p>\n

Agriculture has been the backbone of south-east Asia\u2019s economy, and contributes almost one tenth<\/a> (9%) of global agricultural exports.<\/p>\n

So what is happening in the strait and with El Ni\u00f1o, and how bad could things get?<\/p>\n

What is happening in the strait of Hormuz?<\/p>\n

The US has lifted its blockade of Iranian ports in the Gulf, but the fate of the strait of Hormuz remains uncertain as peace talks continue.<\/p>\n

Iran has threatened to close the strait if Israel keeps up its attacks on Hezbollah in Lebanon and has announced plans to introduce a system of maritime fees<\/a> after the 60-day negotiating period has ended.<\/p>\n

The world\u2019s main shipping watchdog, the International Maritime Organization has already said any toll would set a \u201cdangerous precedent\u201d<\/a>.<\/p>\n

In that scenario, Henning Gloystein, the managing director for Energy, Climate and Resources at Eurasia Group, said south-east Asian nations would club together with other countries across Asia and also in Europe to find an alternative.<\/p>\n

Why does this matter so much for Asian economies?<\/p>\n

The closure of the strait of Hormuz provided a \u201cstark wake-up call\u201d exposing the region\u2019s vulnerability, according to a report released<\/a> by the International Energy Agency (IEA) last week.<\/p>\n

Before the crisis, 60% of south-east Asia\u2019s imports of crude oil and a third of its imports of gas came from the Middle East, according to the IEA. The region\u2019s energy import bill is projected to reach $160bn this year \u2013 double the $80bn bill in 2024. There are predictions it could reach $245bn by 2035.<\/p>\n

The region is also dependent on fertiliser imported from the Middle East. The United Nations\u2019 Food and Agriculture Organization (FAO) estimated this month that about 3.3m tonnes of rice production across Asia and the Pacific are already at risk due to reduced fertiliser use.<\/p>\n

Higher energy and fertiliser costs are pushing up food prices<\/a> across the region. For example, in Myanmar the average cost of a basic food basket has increased by 19% since late February, while the price of fish like tuna has surged as many fishermen cannot afford the fuel to take their boats out<\/a>.<\/p>\n

The fishing industry has suffered in places due to the rising cost of fuel. Photograph: themorningglory\/Getty Images<\/p>\n

Steven Okun, chief executive of geopolitical strategy firm APAC Advisors, said any fees imposed on transit through the strait will lead to higher prices in Asia.<\/p>\n

\u201cWhether it is called a toll or user fee, [it] raises insurance and shipping costs, which flow straight through to fuel prices \u2013 and import-dependent economies in south-east Asia will be hit,\u201d Okun said.<\/p>\n

Where does El Ni\u00f1o fit into this crisis?<\/p>\n

The US National Oceanic and Atmospheric Administration in June declared that El Ni\u00f1o conditions were now under way<\/a> in the tropical Pacific, which experts had predicted<\/a> would have dire consequences for agriculture.<\/p>\n

Farmers in Myanmar, where a quarter of the population lives with acute food insecurity. Photograph: Chalinee Thirasupa\/Reuters<\/p>\n

In a report released on Wednesday<\/a>, the UN\u2019s FAO said its \u201cgreatest concern\u201d lies in the interaction between the emerging El Ni\u00f1o and the market pressures stemming from the Middle East crisis. \u201cWhen both factors are considered together, FAO estimates that 7\u20138 million tonnes of rice production could be at risk under a scenario involving a partial closure of the strait of Hormuz, in Asia-Pacific,\u201d it said.<\/p>\n

Thailand \u2013 with its strong signs of an emerging drought and substantial exposure to global energy and fertiliser price increases \u2013 \u201cstands out as the clearest example of compound risk\u201d the report stated, followed by Indonesia, the Philippines, and several Pacific Island countries.<\/p>\n

Could this double crisis affect countries outside the region?<\/p>\n

Maximo Torero, chief economist at the FAO, said the effects would not be confined to Asia and the Pacific, if millions of tonnes of food production are at risk.<\/p>\n

\u201cThe impact may not appear as an immediate physical shortage everywhere, but as higher food import bills, tighter supplies, reduced farmer incomes, lower purchasing power and increased pressure on vulnerable households,\u201d he said.<\/p>\n

\u201cThe shock is global because it moves through energy, fertiliser, freight, food prices and trade channels.\u201d<\/p>\n

The situation also has an impact on wider international relations, especially if as Okun says, other geographical chokepoints \u201cbecome weaponised\u201d.<\/p>\n

South-east Asia\u2019s energy vulnerability has also given an opportunity to Russia \u2013 once a global pariah due to the Ukraine war \u2013 to boost ties with the region, with analysts saying Moscow presented itself as a \u201cthird power\u201d option<\/a> between China and US at a summit in Kazan last week.<\/p>\n

The summit saw Vladimir Putin secure a raft of energy-related agreements including a framework for cooperation with Laos in the peaceful use of nuclear energy, while also providing assurances to Malaysia<\/a> on oil, gas and diesel supplies.<\/p>\n","protected":false},"excerpt":{"rendered":"When the US and Israel launched the war on Iran, south-east Asian nations were amongst the first and…\n","protected":false},"author":2,"featured_media":755308,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[64,63,99],"class_list":["post-755307","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-au","tag-australia","tag-business"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/755307","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=755307"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/755307\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/755308"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=755307"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=755307"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=755307"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}