Philippines seen resilient to Middle East energy shock – for now

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March 14, 2026 | 12:00am

MANILA, Philippines — The Philippines is expected to weather the initial shock from rising oil and gas prices triggered by the conflict in the Middle East, although prolonged supply disruptions could still pressure energy markets across Asia, according to a report by S&P Global Ratings.

In a report titled “Asia-Pacific Utilities Could Feel the Pinch of Higher Prices,” the credit watcher said the region’s utilities sector has so far remained largely insulated from major supply disruptions despite sharp increases in fuel prices.

“Asia-Pacific utilities are so far mostly insulated from a material impact of disruptions to their major supply of oil and gas imports because of the Middle East war,” the report said.

The agency noted that early stress tests show the region’s importers possess enough reserves, supply buffers and financial strength to withstand temporary upheavals if disruptions last less than a month.

However, risks could intensify if the conflict drags on and keeps fuel prices elevated. “A prolonged period of elevated oil and gas prices could have a big hit on markets with less-effective cost passthrough mechanisms,” the report said.

The war has already disrupted critical energy routes. About 90 percent of global oil shipments and 86 percent of liquefied natural gas passing through the Strait of Hormuz are destined for Asia, making the region particularly sensitive to supply shocks.

In the first 10 days after the conflict escalated on Feb. 28, Brent crude prices surged by 26 percent while the Japan Korea Marker, the benchmark spot liquefied natural gas (LNG) price for Northeast Asia, jumped by 48 percent. Prices have remained volatile since then.

Despite these spikes, the Philippines faces relatively limited risk compared with some of its regional peers.

“The Philippines also sees limited risk due to full fuel cost passthrough and diversified LNG sourcing,” S&P said.

Across Southeast Asia, the impact varies widely depending on each country’s reliance on LNG for electricity generation. Singapore and Thailand are seen as more exposed due to their heavier dependence on LNG imports, though strong financial buffers and tariff mechanisms could soften the blow.

Elsewhere in Asia, risks differ depending on the structure of energy markets. Countries such as China and India could see margins squeezed if higher fuel costs cannot be passed on quickly to consumers.

The rating agency said the broader regional energy system still appears resilient in the short term, partly because winter demand is tapering and many markets have built sufficient fuel reserves.

Still, S&P cautioned that the situation remains highly uncertain given the unpredictability of the Middle East conflict and its potential impact on supply chains, commodity prices and credit conditions across global energy markets.

For now, utilities across Asia-Pacific, including those in the Philippines, have enough financial headroom to absorb temporary shocks, but prolonged disruptions to fuel supplies remain a key risk to watch.