According to Bloomberg Intelligence analyst Sufianti, earnings downgrades have been steepest in the Philippines and Thailand as a growing list of Southeast Asian companies sound the alarm over rising energy costs and weakening consumer demand due to the ongoing Middle East conflict. The Philippines, which imports almost all of its fuel from the Middle East, saw inflation surge to a three-year high of 3.8% year-on-year in April 2026. Thailand's economy, heavily reliant on tourism, grew just 1.9% in Q1 2026, significantly below its projected 2.6%.
The oil price surge, with Brent crude trading between $88 and $94 per barrel since late April 2026, has exposed a structural divide in Southeast Asia. Net energy importers like the Philippines and Thailand are struggling, while commodity exporters such as Malaysia are gaining. The Bangko Sentral ng Pilipinas noted that transport and electricity costs are driving headline CPI in the Philippines, where there are no regulatory buffers between crude prices and pump prices. Similarly, Thailand's GDP growth was dampened by external headwinds despite strong tourist arrivals.
Energy conglomerate PTT Pcl in Thailand has warned of higher financing and procurement costs for crude purchases and is seeking supplies from outside conflict zones. Siam Cement Pcl even suspended some chemical operations due to feedstock shortages caused by Strait of Hormuz disruptions. In Malaysia, Karex Bhd., the world's largest condom manufacturer, is increasing prices by up to 30% because of more expensive oil-based chemical inputs. This highlights the vulnerability of companies with unhedged fuel exposure and tourism dependence in the region.
While a recent interim deal to reopen the Strait of Hormuz offers some relief and a potential US-Iran peace deal on June 17, 2026, could ease oil prices, the fundamental risks remain. The Philippines' energy bill could triple to $245 billion if it doesn't diversify its energy sources quickly. The Bangko Sentral ng Pilipinas is expected to raise its policy rates by a quarter-point to 4.75% as inflation stood at 6.8% in May and is projected to remain above the 2-4% target for 2026 and 2027. Some economists, like Emilio Neri Jr. of the Bank of the Philippine Islands, advocate for a larger 50-basis point hike due to the fragility of the peace deal and the country's high exposure to global supply chain disruptions.
