The Philippines faces the highest economic risk in Southeast Asia from oil market disruptions triggered by the US-Israel conflict with Iran, according to Maybank Investment Bank. With 95% of its oil imported from the Persian Gulf, the nation is exceptionally exposed to supply chain shocks and price volatility.
Maybank has consequently downgraded the country's GDP growth forecast from 4.9% to 4.5% for this year, while raising its 2026 inflation projection from 2.8% to 3.3%. The bank notes that each sustained 10% increase in crude prices pushes Philippine inflation up by approximately 0.45 percentage points—the steepest impact in the region. Rising energy costs are also expected to widen the current account deficit and further weaken the peso.
Compounding these challenges, the Philippines maintains only a 45-day fuel reserve for gasoline, diesel, and other fuels, lagging behind neighbors like Malaysia (70+ days) and Thailand (60-65 days). This limited buffer heightens vulnerability during prolonged supply disruptions.
In response, President Ferdinand Marcos Jr. has declared a national energy emergency and established a P20-billion fund to accelerate fuel procurement. The emergency declaration empowers the Department of Energy to bypass standard procurement rules, expedite imports, and make advance payments exceeding the usual 15% limit to secure shipments.
"The president has also signed Republic Act 12316, granting authority to suspend or reduce excise taxes on petroleum products when global oil prices reach a predetermined threshold," the administration confirmed.
Additional relief measures include transport subsidies for public utility vehicle drivers and operators, along with expanded free or discounted public transport rides to shield commuters from fuel price hikes. Earlier, the government implemented a four-day workweek and restricted non-essential travel to curb fuel consumption in public agencies.
While these immediate steps aim to stabilize the economy, long-term strategies are crucial for building resilience against future energy crises. At a recent energy forum, experts highlighted several pathways:
Renewable Energy Expansion The Green Energy Auction Program, a flagship DOE initiative, uses competitive bidding to attract private investment into renewables. The program targets a 35% renewable share in the power mix by 2030 and 50% by 2040. To date, the government has auctioned 12 gigawatts of renewable capacity for delivery between 2025 and 2035. Maybank estimates that successful auctions could reduce electricity rates by up to 32% in some regions by 2029, diminishing reliance on imported coal and gas.
Nuclear Power Revival The passage of the Philippine National Nuclear Energy Safety Act in September 2025 establishes a regulatory framework for nuclear energy and creates an independent regulator, the Philippine Atomic Energy Regulatory Authority (PhilAtom). The government plans to begin accepting license applications for small modular reactors in late 2026, targeting the first operational plant by 2032. Nuclear power could provide stable "baseload" electricity, complementing intermittent solar and wind sources without the volatility of imported oil.
Transport Electrification Accelerating the shift to electric vehicles (EVs) for public transport is critical. Phasing out aging, diesel-burning jeepneys in favor of EVs would reduce oil dependence and curb emissions. Soaring diesel prices are adding urgency to this transition.
Domestic Gas Exploration Aggressive exploration for natural gas near the declining Malampaya field could prevent total reliance on expensive liquefied natural gas imports. Two major gas discoveries off Palawan in early 2026 offer promising prospects for domestic supply.
Energy Efficiency Smart grid technologies, including AI-driven management of intermittent renewable sources, can optimize energy use and reduce dependence on oil-based power plants during peak demand. Making the four-day government workweek permanent and encouraging private sector adoption could also lower national fuel consumption over the long term.
Together, these strategies aim to transform the Philippines from a regionally vulnerable energy importer into a more self-reliant and resilient economy.