The role of Indo-Pacific middle powers in managing the fallout from the Iran War

Mariia Hirniak
Apr 18
8 min read

Updated: Apr 21

A makeshift sign at Clover Daimon Self-Service Gas Station in Hakodate, Hokkaido, states, “No incoming supply because of Trump. Please excuse us,” 16 March 2026 (photo via X/Twitter @Dks21100)

When U.S. and Israeli forces launched strikes against Iran on February 28, the consequences quickly extended beyond the Middle East. Within seventy-two hours, the Strait of Hormuz, the narrow waterway through which roughly a third of the world's seaborne oil passes, had effectively closed, sending shockwaves through global markets. For Indo-Pacific states, a war they did not start had reached their doorstep.

Managing the fallout will fall heavily on the region's middle powers. A middle power has sufficient diplomatic, military, and economic weight to influence global affairs, but not to reshape the international system alone, including countries such as Japan, South Korea, Australia, India, and key ASEAN states. These middles powers are now facing four urgent challenges: managing an energy crisis, defending the rules that govern international trade and maritime passage, navigating pressure from Washington to take sides, and mitigating renewed hostilities once the fighting stops. How they respond will define the Indo-Pacific’s strategic landscape for years to come.

Managing the energy fallout

An immediate requirement is addressing the shock to the global oil markets, which has produced uneven outcomes. Divergent national responses reveal the depth and limits of prior energy planning.

Both Japan and South Korea had buffer time to make considered decisions rather than reactive ones. While still enduring immediate pressure on fuel resources, Japan entered the crisis with roughly ninety days of strategic petroleum reserves. South Korea bought time by imposing its first fuel price cap in 30 years while urgently sourcing Hormuz-bypass alternatives from the first week.

The picture further south has been considerably harder. Vietnam held petroleum reserves estimated at roughly twenty days when the Strait closed. Its subsequent announcement of plans to procure four million barrels from non-Middle Eastern sources covered approximately six additional days of national consumption, a measure that will be insufficient without sustained new inflows. Indonesia, which imports more than a third of its crude despite being a fossil fuel producer, faced compounding pressure: honoring fuel subsidies through Eid al-Fitr, containing a ballooning fiscal deficit, and managing crude prices that climbed past $100 per barrel against a budget assumption of $70. The Philippines imposed a four-day government workweek. These responses reflect policy systems absorbing structural shocks they were designed to manage at the margins, not the center.

The price asymmetry between benchmarks captures the severity of the crisis. West Texas Intermediate has moved toward $100 per barrel, but Dubai crude, the benchmark that actually matters for Asian buyers has surged past $160, reflecting structural exposure rather than incidental disruption. The concentration of Indo-Pacific energy imports through a single chokepoint has allowed Iran to weaponize the Strait without formally shutting it down. Wood Mackenzie's Simon Flowers has placed $200 per barrel within the range of possibility if the closure is prolonged. The macroeconomic consequences are already materializing: the UN Economic and Social Commission for Asia and the Pacific estimates regional inflation reaching 4.6 percent in 2026 and growth in developing Asia-Pacific economies slowing to around 4.0 percent. There is no near-term relief scenario that does not depend on either a negotiated reopening or a sustained rerouting of supply chains that the region has not yet built.

The crisis has forced Indo-Pacific middle powers to treat energy diversification as an urgent security imperative rather than a long-term aspiration. Japan is accelerating outreach to non-Gulf suppliers, while South Korea, too, is actively sourcing Hormuz-bypass alternatives. The more exposed economies like Vietnam, Indonesia, the Philippines are pursuing emergency procurement and demand-side restrictions, measures that buy time but do not resolve the underlying vulnerability.

This is where collective action can go further: expanding strategic petroleum reserves to meaningful levels, coordinating pooled supply arrangements across ASEAN, committing capital to Hormuz-free delivery infrastructure, and accelerating domestic renewable buildout not just for climate-related policy but for supply-chain insulation. China's years of investment in domestic renewables, long presented as environment-focused, now read across the region as the kind of strategic foresight these governments failed to exercise. The political will to correct that is present; the question is whether it translates into durable institutional investment before the immediate crisis fades and urgency dissipates.

Reinforcing maritime transit and trade rules

The legal architecture governing maritime passage has not collapsed, but it is being deliberately tested in ways that will outlast any ceasefire. Iran's conduct in the Strait has amounted to a permission-based model: selective movement for favored states, effective blockade conditions for others. On 5 March, the Islamic Revolutionary Guard Corps (IRGC) announced the Strait would remain closed to ships from the United States, Israel, and their Western allies; by 13 March, Turkish, Indian, and Saudi-flagged vessels were transiting but only with Iranian permission, and in some cases against fees reported as high as $2 million per passage.

The legal implications extend well beyond the current crisis. Freedom of navigation through international straits is the load-bearing infrastructure of the maritime trading order on which every major export economy in the Indo-Pacific depends. Iran's actions may constitute a violation of UNCLOS provisions on transit passage. What the crisis has demonstrated is that a state under severe military pressure can effectively weaponize a chokepoint. It can do so through selective access, fee extraction, and the implied threat of interdiction without triggering a clearer legal and diplomatic response that a formal closure would invite.

For Tokyo, Seoul, Canberra, and the ASEAN trading states, the postwar settlement is as important as the current emergency. A ceasefire that leaves the permission-based model intact, or that fails to reinforce transit passage norms through multilateral agreement, will have done lasting damage to the order those states depend on. Middle powers that were not party to the conflict have the clearest long-run interest in ensuring the legal outcome is not simply whatever the belligerents negotiate bilaterally.

This concern connects to a pattern of defense-industrial and security cooperation among Indo-Pacific middle powers that predates the Iran crisis. At a Japan-Ukraine defense technology roundtable held in Tokyo in December 2025, participants from both governments and the private sector worked through exactly this question: how democratic middle powers can build durable security architecture through industrial and institutional cooperation rather than relying solely on great-power guarantees. The context was Ukraine's war with Russia, but the underlying logic travels directly to the Hormuz situation: states with converging interests in a rules-based order need to build the capacity to defend it collectively, before the next crisis, not during it.

The Thai cargo ship Mayuree Naree was damaged by Islamic Revolutionary Guard Corps drones while attempting to transit the Strait of Hormuz in early March 2026 (photo via X/Twitter @DD_Geopolitics)

Addressing U.S. demands for cooperation

Washington's conduct during the crisis has created its own category of difficulty for regional partners. The request that allies contribute naval assets to assist in clearing the Strait collapsed a distinction that hedging states have carefully maintained for years: the line between tacit political support and active co-belligerency. Even close U.S. partners have limited their involvement to protect their Indo-Pacific posture from spillover—a signal that the hedging instinct remains intact, but is operating under significant duress.

The demand puts middle powers in a position with no clean exit. Compliance risks entangling states in a conflict with direct consequences for their relationships with Iran, China, and other regional actors. Non-compliance risks the kind of bilateral friction with Washington that hedging theory identifies as a cost to be avoided. The situation is not new in structure, as ASEAN states have navigated versions of this geometry for decades. But the simultaneity of the energy shock and the alignment demand has compressed the decision timeline in ways that make careful calibration substantially harder.

India's position captures the complexity most clearly. New Delhi has pursued multi-alignment with unusual consistency: deepening “Quad” engagement with Washington, maintaining trade relations with Beijing despite active border tensions, and sustaining energy cooperation with Moscow. During the current crisis, India secured a thirty-day waiver for Russian oil purchases and allowed Iranian naval vessels to dock at its ports, with External Affairs Minister Jaishankar defending the latter as simply the right course of action. India's conduct illustrates the kind of sovereign discretion that middle powers will need to preserve: the capacity to make case-by-case judgments that serve national interests across a complex set of relationships, rather than defaulting to bloc loyalty on every issue.

ASEAN's long-practiced collective ambiguity keeping equidistance between Washington and Beijing while pursuing engagement with both, now requires a more explicitly material foundation than it has had. Pooled energy reserves, mutual supply arrangements, shared investment in Hormuz-bypass infrastructure: these are the practical forms that collective hedging needs to take if the concept is to remain credible under pressure.

Japanese Prime Minister Sanae Takaichi participates in a G7 meeting via video-teleconference, 11 March 2026 (photo via the Ministry of Foreign Affairs of Japan)

Mitigating post-conflict hostilities

Any durable postwar settlement must address the maritime law dimension as a foundational element, not an afterthought. This means reinforcing UNCLOS provisions on transit passage and establishing a multilateral framework that prevents future weaponization of the Hormuz chokepoint in ways independent from the political orientation of whatever government holds power in Tehran. The permission-based model Iran has demanded must be formally delegitimized through the postwar legal architecture, or it will serve as a template.

This was the subject of the France and United Kingdom-hosted “International Summit on the Strait of Hormuz” which took place on 17 April. 51 countries joined via video- teleconference, including Indo-Pacific middle powers such as Japan, South Korea, and Australia. Whether this meeting will materialize concrete efforts to establish a multinational mission in the region—particularly with Indo-Pacific contributions—remains uncertain.

For Indo-Pacific middle powers, the postwar period is also an opportunity to reframe what collective security engagement looks like in practical terms. The academic literature on ASEAN-led multilateralism has long argued that regional institutions serve functions of binding, buffering, and building, mitigating and offsetting risks while shaping the Asian order. The Iran crisis has delivered a direct stress test of that claim. The results are mixed, but the framework has held enough to build on.

The Tokyo defense-industrial dialogue between Japan and Ukraine pointed toward one operational model. Middle powers with complementary capabilities and shared stakes in a rules-based order can build durable cooperation through institutional channels rather than ad hoc bilateral deals. Ukraine's combat-proven defense innovation and Japan's manufacturing depth represent a partnership with implications that extend well beyond the bilateral relationship, demonstrating that democratic industrial cooperation under conditions of active conflict is both possible and strategically generative. The same logic applies across the Indo-Pacific, where states with different capabilities and threat perceptions share a fundamental interest in maritime legal norms and supply chain resilience.

The battle of narratives that follows a ceasefire will carry as much weight as the ceasefire terms themselves. If the postwar framing treats the Hormuz closure as a temporary aberration rather than a structural vulnerability requiring systemic response, the window for building more durable arrangements will close quickly. Middle powers that had no seat at the table when the conflict began need to secure one in the settlement process, as states with legitimate interests in the legal and institutional architecture that governs international commerce and security, not as supplicants seeking protection.

The Iran war did not create Southeast Asia's energy vulnerabilities. It made them visible at a moment when visibility demands response. What the region does with that moment will shape its strategic landscape well beyond the current crisis.

Mariia Hirniak is an international relations analyst currently completing her graduate studies at the International University of Japan, specializing in international conflict analysis and humanitarian diplomacy. She is a junior analyst at Resurgam Hub (OSINT Think Tank) and an external analyst at ADASTRA - Ukraine’s leading youth think tank. She is also actively contributing to the defense conference planning at the International Security Industry Council (ISIC) of Japan.