SOUTH-EAST ASIA (Bloomberg): About 50 miles away from Cambodia’s capital in the farming province of Kampong Speu, Vuth Dara has laid off two of his five workers, pulled his children out of English classes and swapped an electric stove for charcoal after soaring fuel costs slashed demand for the ice he sells to local restaurants.
The cost of gasoline in the Southeast Asian nation climbed more than 40% after US strikes on Iran in February disrupted energy supplies through the Strait of Hormuz.
Prices have eased slightly since a short-lived ceasefire, but higher transport and operating costs continue to squeeze households and small businesses, raising the risk of longer-term economic damage.
Now, any resumption of hostilities risks another surge in prices Cambodians like Dara can ill afford.
"I need to force my family to make hard choices,” said the 45-year-old father of three, whose daily sales have fallen to 20 bags from 50. With a $20,000 bank loan hanging over his home and business, Dara worries another crisis could cost him both.
His struggle is part of a much bigger problem unfolding across Asia - one that is visible from space. Bloomberg Economics analysis of NASA satellite imagery found that nearly 60% of the land area in the region experienced abnormal declines in nighttime radiance since the conflict began.
The ceasefire in June helped bring this ratio down somewhat to 54%, but a collapse would threaten a return to energy shortages, especially in the region’s poorest, most fuel-dependent economies, such as Bangladesh, Pakistan and Cambodia.
The dimming appears concentrated outside major cities, suggesting the burden is falling disproportionately on poorer rural communities even as capitals and industrial hubs remain relatively resilient. While changes in nighttime radiance are not a direct measure of economic impact, they may point to places where higher energy costs are forcing households and businesses to consume less or scale back activity.
The findings fit a broader pattern that has defined President Donald Trump’s second term after his "Liberation Day” tariffs rattled Asia’s poorest export-dependent economies. With more than 80% of energy that flows through the Hormuz strait bound for Asian markets, the on-again-off-again Iran conflict could once again hit the countries least equipped to absorb another global shock.
The region’s developing countries are "almost entirely dependent on energy imports,” said Matteo Lanzafame, director of the macroeconomics research division at the Asian Development Bank. "If you think about it in terms of the volume of oil supply that has been taken out of the global supply of oil, this is like the biggest shock in history.”
Bloomberg Economics identified the Asian economies most vulnerable to an oil shock based on their dependence on imported fuel and income levels, then tracked changes in nighttime radiance before and during the conflict, controlling for typical seasonal patterns.
Bangladesh emerged as the hardest hit, with over 70% of its land area dimming as of May, compared to a year earlier. Myanmar, Pakistan, China, India and Cambodia also saw widespread declines across much of their territory. Some saw relief in June.
The satellite imagery broadly coincides with evidence that higher fuel costs have curtailed tourism, transport and other energy-intensive activity, particularly outside major cities where infrastructure is weaker and households have fewer ways to absorb rising costs.
The ADB cut its GDP growth forecast for developing Asia and the Pacific to 4.9% from 5.1% this year, while raising the inflation outlook to 4.3%, warning that oil may stay well above pre-war levels through 2027 as commodity supply chains will need time to normalize.
The International Energy Agency estimates Southeast Asia’s energy import bill will roughly double this year to about $160 billion, as countries continue paying well above pre-war prices for fuel.
The war was top of the agenda during a recent gathering of Southeast Asian nations in Manila, with diplomats raising the matter in most if not every meeting on the agenda.
The ensuing scramble for energy supplies has pushed US partners in Southeast Asia closer to America’s adversaries. Philippine President Ferdinand Marcos Jr. discussed energy security with Vladimir Putin during a summit in Kazan in June, while Indonesia and Thailand have sought deeper energy ties with Moscow as governments look to diversify fuel supplies.
Cambodia recently broke ground on a Chinese-backed, nearly $1 billion hydropower project and neighboring Laos is expanding electricity links with Beijing as countries race to strengthen long-term energy security.
"In this difficult time, we want to make sure that industry continues to grow, at least keep their factory processes going,” Cambodia’s Minister of Mines and Energy Keo Rottanak told Bloomberg during an interview in Phnom Penh. He added that the country’s growing use of renewables has helped blunt the fiscal impact from absorbing higher prices due to the war. "If it were to take longer, we will continue to support our households and our industries as long as it takes.”
Tourism-dependent parts of the region are also feeling the impact.
On the Philippine island of Malapascua, where electricity comes from diesel generators, dive resort owner Matt Reed says fuel costs have doubled while bookings have fallen about 25%, forcing him to raise surcharges and consider cutting costs. The Philippine government estimates it could take up to a year for domestic pump prices to return to pre-war levels.
"We’ve been effectively hit on all sides, from purchases of materials, basic operations of the dive shop, the power in the resort - it’s all costing us significantly more now,” Reed said.
Governments responded at the outset of the Iran conflict with tax cuts, subsidies and conservation measures as they scrambled to cushion consumers from higher fuel costs. Vietnam reduced flights, China and Thailand tightened refined fuel exports, while the Philippines declared a national energy emergency.
The strain is already visible in Bangladesh where the conflict has added an estimated $2.5 billion to Bangladesh’s energy import bill, forcing the government to buy spot LNG cargoes at nearly three times benchmark prices.
In its industrial centers, construction work has halted on new factories and production activity stalled in existing ones. Corporate offices are also using lights sparingly, while malls and restaurants are required to shut earlier than usual. Villages are absorbing the worst of the nation’s 300-megawatt electricity shortfall, with outages stretching for hours a day in some districts.
There is a "real possibility” parts of the Asian economy will suffer lasting scars similar to those left by the pandemic if households take on debt and businesses cut jobs or downsize operations, ADB’s Lanzafame said. "This is impacting the potential output that the economy can produce. This isn’t just the effect of a business cycle.”
For Dara, the ripple effects of a war thousands of miles away are impossible to miss. "When people stop going out, it will affect every kind of business,” he said.
--With assistance from Arun Devnath, Tooba Khan, Adrian Leung, Shadab Nazmi and Neil Jerome Morales.
-- ©2026 Bloomberg L.P.
