Oil crisis from Iran conflict drives electric vehicle surge in Asia

Thursday 26 March 2026 - 07:50

By: Dakir Madiha

Oil crisis from Iran conflict drives electric vehicle surge in Asia

The energy shock triggered by the war in Iran is reshaping Asia’s energy outlook. Analysts say the disruption is accelerating the region’s shift toward renewable energy and electric vehicles, even as several countries increase coal use in the short term.

Fighting has severely disrupted oil shipments through the Strait of Hormuz, a key maritime route that carries about one fifth of global oil and liquefied natural gas. The supply shock pushed crude prices to around 119 dollars per barrel last week. Asia, which receives nearly 90 percent of the oil and gas passing through the strait, faces the strongest impact.

Rising fuel costs are already changing consumer behavior. Analysts report growing demand for electric vehicles, particularly in markets with access to lower cost Chinese models. Dealerships in Manila have recorded a surge in orders, while showrooms in Thailand report electric vehicle sales rising by at least 20 percent since the conflict began.

Data from energy think tank Ember shows that the global electric vehicle fleet reduced oil demand by 1.7 million barrels per day last year. In China, where electric cars account for more than half of new vehicle sales, avoided oil imports could save over 28 billion dollars annually at current levels. In India, higher fuel prices are pushing undecided buyers toward electric options as cost advantages become clearer.

Despite this shift, coal is making a short term comeback. Countries including South Korea, Indonesia and Bangladesh are increasing coal use as liquefied natural gas prices surge. India is expanding coal production ahead of peak summer demand, while Thailand, the Philippines and Vietnam are also boosting output. Benchmark Newcastle coal prices have risen by 13 percent since the start of the conflict.

Experts warn that increased reliance on coal could slow long term decarbonization efforts. However, many analysts view the crisis as a structural turning point. Leaders and researchers argue that reducing dependence on imported fossil fuels has become a strategic priority.

In Pakistan, rapid solar expansion has already cut billions in fuel import costs and is expected to deliver further savings. Analysts note that the crisis reinforces concerns about energy security tied to fossil fuel imports, particularly in large economies such as China.