Strait to the Point: How the Hormuz Crisis Is Reshaping Cambodia's Energy Future

The US-Israeli military conflict with Iran has redefined global energy supplies. By closing the Strait of Hormuz, Iran has disrupted close to 20 million barrels a day of oil flows. Frantic negotiations have done little to change this - with hundreds of tankers stuck for weeks.

As a result, the International Energy Agency has said that the current situation in global energy ​markets is worse than the 1973, ⁠1979 and 2022 crises combined.

For Southeast Asia, the impacts have been particularly acute. The region relies heavily on supplies from the Middle East, with the region sourcing roughly 90% of its fuel through that single chokepoint.

The effects have been immediate, with gasoline and diesel prices shooting up across the region. Cambodia saw gasoline increase by over 50% while Laos saw increases over 30%. Diesel - the lifeblood of logistics and shipping - has shot up even further, increasing by around 80%.

Affordable Liquid Petroleum Gas (LPG) is also quickly emerging as a key risk. LPG keeps tuk tuks on the road and meals on the table, as it's used by millions of Cambodians to cook and run small businesses. While Cambodia has been able to manage the impacts of Sokimex’s decision to halt imports of LPG, it is clear that the risks are substantial and that running out of this fuel would be disastrous.

It is no exaggeration to say that cutting fossil fuel imports, using electricity wherever possible and maximising local energy generation has become an overriding national imperative.

Encouragingly, the tools to respond are already at hand. Around the world, countries are rapidly adopting renewable energy. Ember’s Chinese solar export tracker shows a remarkable increase in solar exports - with the equivalent of Spain’s total solar capacity exported in just one month.

Governments have also been moving quickly to improve access to electric vehicles. As EnergyLab Asia’s Mardy Hout explained in the Khmer Times Cambodia has introduced substantial reductions in import taxes across key electrification technologies, including electric vehicles, solar PV systems, energy storage, and electric household appliances.

But these changes have not changed the price of motorbikes - the most popular mode of transport.

Dean Rizzetti’s recent opinion article has argued that shifting to electric motorbikes drastically improves household resilience - “a family that buys an electric motorbike and charges it from rooftop solar is putting power back in the hands of Cambodians. Their commute is no longer hostage to military decisions made in Washington or Tehran.”

Supercharging the shift to electric motorbikes will require action on a range of fronts - improving understanding of the technology, supporting those that want to make the shift and making it easier to buy a model that meets your needs. EnergyLab Asia is working with a range of partners to help explore these opportunities, and this will continue to be a major focus of our work in the coming months.

The stakes of the current moment could not be higher - as ships continue to be blocked, diplomatic solutions feel distant. The impacts of a continued crisis could have devastating economic impacts, but in tackling this challenge there is a clear opportunity for Cambodia to come out with a cleaner, more resilient energy system that will protect the country for decades to come.