While OPEC+ and the US may be the two whales of global oil markets, ASEAN is not a third whale. Its countries are a school of smaller fish swimming between them. They do not get to decide how the whales move. What they can decide is how to navigate: not locking onto one whale’s wake, but staying agile enough to shift when the current changes, Tu Anh Tuan writes.
On the energy crisis emanating from the Middle East: Vietnam is not a party to this conflict. Nor is it a major oil producer. In many ways, it is a buyer that has absorbed the spill-over damage—an experience shared by many open, trade-dependent, energy-importing nations across ASEAN and beyond, facing what economists might call the “strategic externality cost” of modern warfare . When we speak of the cost of war, we typically count the casualties and destruction suffered by the belligerents. But in a world tightly bound by oil, shipping, exchange rates, credit, and supply chains, a contemporary conflict inflicts a second, quieter, and far more rapidly spreading form of damage—one that lands on countries that never fired a single shot. That is the strategic externality cost: the aggregate of economic, financial, security, institutional, and policy losses that non-belligerent states absorb through the ripple effects of a major geopolitical confrontation.
Let us walk through five layers of this cost, using Vietnam as a case study.
The first layer is energy—the most immediate and direct shock. When the Strait of Hormuz came under threat, roughly one-fifth of the world’s oil and LNG flows were suddenly at risk. For Vietnam, approximately 80 percent of its crude oil imports had historically come from Kuwait, a single corridor directly exposed to Hormuz. Since the conflict began, domestic pump prices have risen by roughly 50 percent, and diesel by around 70 percent.
The second layer is logistics and aviation, where the externality manifests as physical disruption, not just price volatility. Vietnam faced the prospect of flight cutbacks after key suppliers of its imported jet fuel suspended refined fuel exports. This is a distinct type of vulnerability: it is not merely that fuel becomes more expensive—it is that access itself can be severed, with knock-on effects for tourism, regional connectivity, and logistics costs.
The third layer is inflation and macroeconomic management. An external energy shock compresses the policy space of every central bank and finance ministry in the region. Vietnam was suddenly forced to manage three objectives at once—inflation, growth, and the exchange rate—in response to a geopolitical shock originating thousands of kilometres away.
The fourth layer is growth and exports. Vietnam’s total trade exceeds $930 billion, with exports around $475 billion. That openness is its greatest strength—and its greatest exposure. It is hit not only on the input side, through energy costs, but potentially on the output side as well, if global demand softens as trading partners cut back on imports to absorb their own energy shocks.
The fifth layer is diplomatic and consular—a cost that is real but does not show up in GDP. Vietnam had to negotiate directly with Iranian authorities to secure safe passage through the Strait of Hormuz for Vietnamese-flagged and Vietnamese-operated vessels, issue travel advisories, and monitor the safety of citizens and seafarers in the region. These are governance costs: institutional capacity diverted to manage a conflict we did not create.
This pattern is not unique to Vietnam. The mechanism is the same everywhere: for an open, energy-importing economy, there is no hard border between someone else’s war and its own domestic stability.
On the question of sanctions: there is a meaningful distinction in international law between multilateral sanctions authorised under the UN Charter (Chapter VII) and unilateral or extraterritorial measures taken by major powers. Major powers will naturally continue to use sanctions as a tool of statecraft. Vietnam, like most non-parties to this dispute, has concerns about the latter—particularly when secondary sanctions generate spill-over effects.
While OPEC+ and the US may be the two whales of global oil markets, ASEAN is not a third whale. We are a school of smaller fish swimming between them. We do not get to decide how the whales move. What we can decide is how we swim: not locking onto one whale’s wake, but staying agile enough to shift when the current changes. That means building sufficient independent buoyancy—our own reserves, our own diversified routes, our own compliance capacity—so that whichever whale is ascending this year, we are not simply floating on its back. Based on Vietnam’s experience, I would suggest three priorities that apply broadly to many small and middle powers:
First, diversifying supply is key to resilience. The goal is to avoid depending on any single system, currency, or partner to the point where that dependence becomes leverage against you. That means diversifying trading partners, exploring more options for bilateral local-currency settlement, and diversifying inputs. This is risk management.
Second, build compliance capacity to navigate between the lines. Banks, customs authorities, and firms need the sophistication to read different layers of sanctions correctly and comply with those that carry genuine legal exposure, without automatically severing every tie to a sanctioned partner. The UAE, Turkey, and India have demonstrated this since 2022: they maintained relations with Russia on one side and with Western partners on the other, by keeping transactions transparent, well-documented, and separable.
Third, draw on ASEAN solidarity and creativity in cooperation with Russia. Energy and connectivity cooperation—such as that reflected in Vietnam’s nuclear energy agreement with Russia and in the ASEAN—Russia LNG discussions—should be structured from the outset with clean, well-documented transaction chains. That is what makes long-term cooperation durable, regardless of how the sanctions landscape shifts.
This article is based on remarks by Tu Anh Tuan, Senior Researcher, Vietnam Institute for International Studies, Diplomatic Academy of Vietnam at the Valdai Club’s expert discussion, “War, Sanctions, Supply, and Demand: Oil Markets After the Gulf Crisis”.
