Southeast Asians Brace for Energy-Price Fallout from Ukraine Invasion

Updated at 4:52 p.m. ET on 2022-02-24

Russia’s massive invasion Ukraine sparked fears among governments and observers in Southeast Asia on Thursday that the outbreak of a full-scale war on the other side of the globe could cause energy prices to spike.

In Manila, the Philippine government said it was preparing a “relief assistance” package to help Filipinos cope with a surge in oil prices after Russian President Vladimir Putin ordered his military forces into Ukrainian territory earlier in the day. 

The Philippine central bank, Bangko Sentral ng Pilipinas, has set aside about 2.5 billion pesos (U.S. $50 million) for a fuel-subsidy program tied to rising crude prices amid jitters caused by the invasion of Ukraine, officials said. 

The bench-mark Dubai crude-oil price for this year was expected to average $83 per barrel, but oil prices topped $100 a barrel after Russia launched the invasion, according to media reports. 

“Given recent developments, the government remains ready to provide targeted relief assistance and support to address the impact of the oil price for the affected sectors, especially the public utility vehicle drivers, farmers and fisherfolk,” the Development Budget Coordination Committee (DBCC) said in a statement.

Elsewhere, Thailand’s Ministry of Energy permanent secretary and a Malaysian analyst expressed similar concerns about economic turmoil stemming from the Russian military strike.

“The top concern is on the prices of energy products,” Thai official Kulit Sombatsiri told reporters on Thursday, adding the price rise could “cause great impacts worldwide.”

He noted that the ministry gets only 3 percent of its crude oil and liquefied natural gas from Russia and has a two-month reserve. Still, he said the ministry would focus on offsetting possible impacts while warning the public to adopt energy-saving practices.

In Kuala Lumpur, Tunku Mohar Mokhtar, a political analyst at International Islamic University of Malaysia, echoed those concerns.

“Any war will have a global impact, even more if it involves a great power like Russia,” he told BenarNews. “The only consolation for Malaysia is it does not depend too much on Russia and any losses from trade or other kinds of cooperation can be compensated by Malaysia’s relations with other countries.

“Russia is not our main trading partner, so the effect would not be too bad on us. However, rising oil prices will surely impact the average consumer and may trigger increase in prices of other goods.”

Western countries had implemented sanctions against Russia in a bid to defuse tensions, but those efforts did not deter President Putin, who had gathered about 200,000 troops along Ukraine’s northern, eastern and southern borders, according to reports. 

“In terms of energy markets, gas and oil prices will face upward pressure depending on how successful Russia is at unloading hydrocarbons in the face of such sanctions,” James Stavridis, a retired U.S. Navy admiral and former NATO allied supreme commander, wrote in an op-ed piece in Nikkei Asia on Thursday.  

“With many developed economies currently experiencing surging inflation, this will have a depressive impact on global manufacturing, causing slowdowns across many Asian countries,” he said in his piece examining the impact on Asia of Russia's invasion of Ukraine.

In the Philippines, the DBCC, which sets economic targets and provides recommendations on the country's financial position to the president, said it was preparing to release funds to the Department of Transportation’s fuel subsidy program. The program is expected to provide fuel vouchers to more than 377,000 people nationwide.

“The government remains committed to taking decisive action to ensure the unhampered supply of goods and services despite the rising oil prices amid the pandemic,” the DBCC said, adding it was monitoring developments in Ukraine. 

In addition, the Philippine agriculture sector, which depends on fuel to operate machinery, is to be given fuel discounts valued at 500 million pesos ($9.7 million), the DBCC said. 

“This will help mitigate the impact of elevated fuel prices on production and transport costs of farm and fishery products,” it said. 

The Philippines imports nearly all of its oil even as the government is working to increase other sources of energy such as wind and geothermal. 

Repatriation efforts

Meanwhile, the Philippine Department of Foreign Affairs (DFA) also assured citizens in Ukraine that repatriation efforts were ongoing. 

“We urge our kababayan (compatriots) in Ukraine not to panic but to exercise caution and mind their movement, to keep their vigilance and to maintain communication,” with Filipino diplomats in the country, the DFA said in a statement.

Before Putin launched his “special military operation,” Philippine Foreign Secretary Teodoro Locsin Jr. had assured his countrymen that the DFA was focused on evacuating more than 300 Filipinos. 

“The safety of Filipinos in Ukraine is the Philippine government’s chief and singular concern,” Locsin said in a statement on Wednesday. 

“Our chief and singular concern is to take out of harm’s way our fellow Filipinos in Ukraine and bring them to the nearest places of safety by the fastest possible way. Our offer to take Filipinos in Kiev is under way,” he said.

Nontarat Phaicharoen and Wilawan Watcharasakwet in Bangkok and Muzliza Mustafa in Kuala Lumpur contributed to this report.