Shadow of West Asia on the Indo-Pacific
In this edition of Indian Radius, we assess how the evolving conflict in West Asia is reverberating across the Indo-Pacific.
INS Chennai in the Gulf of Oman, 2019
In June 2019, the Gulf of Oman became the flashpoint for a major international crisis that nearly brought the United States and Iran to the brink of war.
The incident centred on the June 13, 2019, tanker attacks, where two commercial vessels, the Japanese-owned Kokuka Courageous and the Norwegian-owned Front Altair, were rocked by explosions while transiting international waters very close to the Strait of Hormuz.
The irony was that the attacks occurred on the very day that then-Japanese Prime Minister Shinzo Abe was in Tehran meeting with Supreme Leader Ayatollah Khamenei to mediate between the U.S. and Iran. The timing was seen as a “deliberate message” or an attempt by hardliners to sabotage the peace talks.
Although there was no formal claim of responsibility, it spread anxiety about maritime sabotage. Shortly after, the Indian Navy launched Operation Sankalp. It deployed the destroyer INS Chennai and patrol vessel INS Sunayna to the Gulf of Oman to provide security for Indian-flagged tankers.
Operation Sankalp, which was supposed to be a temporary measure, never truly ended. It evolved from a two-ship reassurance mission into the multi-destroyer force currently trying to keep India’s economy afloat amid the 2026 war.
The immediate impact of the war on the Indo-Pacific is structural, with both economic and political aspects. The region is deeply exposed to West Asian energy flows, maritime trade networks and the global allocation of U.S. strategic resources. In this context, three primary channels of impact emerge:
The first-order effect for Indo-Pacific economies is energy vulnerability. Roughly 80% of all oil and LNG transiting the Strait is destined for the Asia-Pacific. Asian fuel markets are already tightening sharply, worsened by China’s suspension of fuel exports, which had served as an important balancing source for regional buyers. Diesel and jet fuel prices in the region have surged, and countries are scrambling for substitutes.
A second issue is shipping. The Indo-Pacific depends on secure sea lanes from the Gulf to South and East Asia. When Hormuz is disrupted, the costs extend beyond crude oil itself to tanker availability, insurance, delivery schedules, and refineries’ adaptation to substitute grades. This has had ripple effects on airlines, petrochemicals, fertiliser production, export manufacturers, and food supply chains that depend on shipping stability.
The third impact is geopolitical. A war has already diverted U.S. military attention, assets, and decision-making bandwidth away from the Indo-Pacific. That raises concerns among allies and partners that deterrence in East Asia could temporarily weaken, even if Washington does not formally change its Indo-Pacific commitments. To support the war effort, Washington has begun moving critical assets from the region. This includes the redeployment of THAAD missile components from the Korean Peninsula and the shifting of carrier strike groups and munitions from Japan to the Gulf.
Let’s look at the impact on some of the key players in the region:
India
India is perhaps the most acutely affected, given its reliance on the Gulf for over 50% of its crude oil and LNG. A critical shortage of LPG, widely used as cooking gas, has led to long queues at distribution centres and the temporary closure of restaurants. The government has invoked emergency powers to redirect industrial gas to households. While a few Indian-flagged tankers were granted passage, over 20 vessels remain stranded west of the Strait. The Indian Navy has expanded operations to escort merchant vessels through the Gulf of Oman and the Arabian Sea.
South Korea
For South Korea, the war has exposed the link between West Asian oil and the global AI-tech boom. The KOSPI index plunged 18% in early March, its worst drop since 2008, wiping out $500 billion in value as investors fled the energy-vulnerable semiconductor sector. The Gulf region produces roughly 40% of the world’s helium, essential for chip manufacturing. Disruptions have raised fears that Samsung and SK Hynix may have to throttle production, affecting global electronics supply chains. The government has also implemented the first cap on fuel prices in 30 years and ordered the release of 22.5 million barrels from reserves.
Australia
While Australia is a net energy exporter, it has been entangled diplomatically through its deep military integration with the United States. Australian facilities at Al Minhad Air Base (UAE) have come under Iranian drone attacks twice already. Since then, it has deployed an E-7 Wedgetail aircraft and intends to supply AMRAAM missiles to the Gulf. Public trust has been shaken by reports that the Pine Gap base in the Northern Territory provided targeting data for U.S. strikes on Iranian soil, leading to widespread domestic protests and claims of “complicity” in a new “forever war”.
Japan
Japan, like India, is heavily dependent on overseas fossil fuel imports. It has already begun releasing 45 days’ worth of its 254-day strategic oil stockpile to prevent industrial and domestic paralysis. The surge in oil prices has caused Japan’s trade deficit to balloon, putting immense pressure on the Yen and forcing Prime Minister Sanae Takaichi to seek emergency LNG deals with the U.S. and Australia. This conflict is serving as a catalyst for two internal movements: reviving nuclear power facilities and reconsidering non-nuclear principles in the context of national security.
South East Asia
Indonesia and Malaysia are facing a fiscal crisis as they struggle to fund fuel subsidies to prevent social unrest. Thailand’s rice exports to West Asia have effectively stalled, with tens of thousands of tons of grain stranded at ports due to prohibitive shipping costs and risks. The government of Vietnam has urged citizens to work from home and switch off air conditioning to prevent a total collapse of the power grid. In the Philippines, officials have moved to a four-day workweek for government agencies to slash fuel consumption by 20%. As a global refuelling hub, Singapore has seen marine fuel prices double, impacting costs for key grades, including high-sulphur fuels, low-sulphur fuels and marine gas oils.
Openings and Responses
The impact of the war is primarily negative, but it does lead to certain policy responses. First, the crisis will likely accelerate energy diversification in the Indo-Pacific. States may finally move faster on strategic reserves, LNG diversification, grid resilience, nuclear energy expansion, and renewables.
Second, it may encourage deeper maritime coordination among Indo-Pacific states. India, Japan, Australia and ASEAN states have a shared interest in energy-sea lane resilience. Third, countries with refining flexibility or alternative export capacity may see commercial opportunities to export surplus petroleum products, such as diesel, jet fuel, and petrochemicals, to deficit markets.
Overall, the Indo‑Pacific countries are trying to stay out of the line of fire diplomatically: by issuing generic calls for restraint, prioritising the evacuation of workers and nationals in West Asia, and resisting pressure to join sanctions or coalitions.
For deeper coverage of the war, follow The Takshashila Institution’s “West Asia War Tracker,” which offers daily bulletins, rolling updates, and sharp, timely assessments of the conflict.
What We’re Reading and Listening to
[Book Reviews] In the latest edition of India’s World magazine, catch What Takshashila Institution is Reading on China - with five great recommendations from the contributors
[Video] Listen to this NewsLaundry episode where Aditya Ramanathan discusses war troubles - from the workings of the Shahed drone to the sinking of the Iranian ship in the Indian Ocean
[Opinion] Read Anushka Saxena’s recent Times of India piece on the “valuable function” Iran seems to have for China in its larger West Asia strategy.
[Video] Watch this interview with Professor Pradeep Taneja from the University of Melbourne and Vanshika Saraf on how Indo-Pacific allies are dealing with an unreliable United States
Thank you for reading this edition of the Indian Radius.