While OPEC+ and the US may be the two whales of global oil markets, ASEAN is not a third whale. Its countries are a school of smaller fish swimming between them. They do not get to decide how the whales move. What they can decide is how we swim: not locking onto one whale’s wake, but staying agile enough to shift when the current changes, Tu Anh Tuan writes.
On the energy crisis emanating from the Middle East: Vietnam is not a party to this conflict. Nor is it a major oil producer. In many ways, it is a buyer that has absorbed the spill-over damage—an experience shared by many open, trade-dependent, energy-importing nations across ASEAN and beyond, facing what economists might call the “strategic externality cost” of modern warfare
. When we speak of the cost of war, we typically count the casualties and destruction suffered by the belligerents. But in a world tightly bound by oil, shipping, exchange rates, credit, and supply chains, a contemporary conflict inflicts a second, quieter, and far more rapidly spreading form of damage—one that lands on countries that never fired a single shot. That is the strategic externality cost: the aggregate of economic, financial, security, institutional, and policy losses that non-belligerent states absorb through the ripple effects of a major geopolitical confrontation.
Let us walk through five layers of this cost, using Vietnam as a case study.
The first layer is energy—the most immediate and direct shock. When the Strait of Hormuz came under threat, roughly one-fifth of the world’s oil and LNG flows were suddenly at risk. For Vietnam, approximately 80 percent of its crude oil imports had historically come from Kuwait, a single corridor directly exposed to Hormuz. Since the conflict began, domestic pump prices have risen by roughly 50 percent, and diesel by around 70 percent.
The second layer is logistics and aviation, where the externality manifests as physical disruption, not just price volatility. Vietnam faced the prospect of flight cutbacks after key suppliers of its imported jet fuel suspended refined fuel exports. This is a distinct type of vulnerability: it is not merely that fuel becomes more expensive—it is that access itself can be severed, with knock-on effects for tourism, regional connectivity, and logistics costs.
The third layer is inflation and macroeconomic management. An external energy shock compresses the policy space of every central bank and finance ministry in the region. Vietnam was suddenly forced to manage three objectives at once—inflation, growth, and the exchange rate—in response to a geopolitical shock originating thousands of kilometres away.
The fourth layer is growth and exports. Vietnam’s total trade exceeds $930 billion, with exports around $475 billion. That openness is its greatest strength—and its greatest exposure. It is hit not only on the input side, through energy costs, but potentially on the output side as well, if global demand softens as trading partners cut back on imports to absorb their own energy shocks.
The fifth layer is diplomatic and consular—a cost that is real but does not show up in GDP. Vietnam had to negotiate directly with Iranian authorities to secure safe passage through the Strait of Hormuz for Vietnamese-flagged and Vietnamese-operated vessels, issue travel advisories, and monitor the safety of citizens and seafarers in the region. These are governance costs: institutional capacity diverted to manage a conflict we did not create.
The Valdai Discussion Club was established in 2004. It is named after Lake Valdai, which is located close to Veliky Novgorod, where the Club’s first meeting took place.
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