After the Hormuz disruption, Asia should build an energy security alliance

Political & Constitutional Dimensions: The proposal for an AECC represents a significant diplomatic initiative that would require India to position itself as a regional leader in energy governance. The article suggests India should 'lead a call' for such an institution, implying a leadership role that aligns with its 'Neighbourhood First' and Act East policies. However, the proposal faces political challenges: unlike the Western nations that formed the IEA, Asian countries do not share a common political ideology or system. The proposal must navigate tensions between China (a potential AECC member) and India, as well as the broader India-China strategic rivalry. The UNCLOS framework guaranteeing 'innocent passage' has been breached by Iran's action, creating a precedent that challenges the rule-based maritime order. The article raises critical questions about counterfactuals: what if the Strait of Malacca were choked? What if Taiwan Strait or South China Sea traffic faced regulatory restrictions?

Economic & Financial Impact: The 'Asian Premium' phenomenon—where Asian importers paid $3-6 per barrel more than the North Sea benchmark before the conflict, widening to $60 per barrel after hostilities began—raises questions about asymmetric bargaining power. The article suggests this steep price hike may not have been due entirely to supply-demand dynamics but also to Asian importers' failure to leverage aggregate purchasing power. The IEA currently provides market intelligence on supply disruptions, but the article argues Asia needs its 'own bespoke agency' due to the IEA's 'Western skew.' The UAE's exit from OPEC signals fractured relationships among Gulf exporters, deepening the urgency for Asia to shift toward renewables.

Social Dimensions: The immediate human impact is evident: the Philippines declared a national energy emergency, Japan reduced public transport services, and India rationed LPG to commercial establishments. These measures disproportionately affect lower-income households and small businesses that rely on LPG for cooking. The energy crisis highlights global interdependence: while China has buffered itself through Russian supplies and strategic reserves, less resilient economies face severe shortages. The green energy transition, if accelerated through AECC, could create new employment opportunities in renewable energy sectors across Asia.

Governance & Administrative Aspects: The AECC proposal requires careful institutional design. Unlike the IEA (which operates under the OECD's umbrella), AECC would need to function across diverse political systems. The article suggests AECC should develop mechanisms enabling collective negotiation for better supply terms and reduced freight/insurance costs, 'whilst not impeding a country's ability to trade independently.' Real-time market intelligence sharing on supply disruptions, infrastructure incidents, and geopolitics would require robust data-sharing protocols. The third role—as a 'green energy think tank'—would require coordination of complementary assets: technology, finance, mineral and metal resources, and human talent across member countries.

International Perspective: The IEA model provides a template but with important differences. The IEA was created in January 1974 following Kissinger's Washington conference to counter OAPEC. The IEA's emergency oil reserve system and coordinated release mechanisms have been tested multiple times. However, the IEA's Western focus means its intelligence and response frameworks may not adequately address Asian vulnerabilities. The proposal aligns with broader trends in Asian regionalism but faces competition from existing frameworks like ASEAN, which has its own energy cooperation mechanisms.