MIDDLE EAST CONFLICT TRIGGERS ENERGY SHOCK TESTING ASIA'S ECONOMIC RESILIENCE AMID US-CHINA RIVALRY

Asia's economy entered 2026 with solid footing despite trade tensions, but a Middle East conflict has created an energy shock that is now testing regional strength through higher oil and gas prices and widened trade gaps. US-China competition for control of critical maritime routes, energy resources, and strategic territories including Taiwan, the South China Sea, and the Strait of Malacca is intensifying geopolitical risks across the Asia-Pacific. Economic interdependence between China, Japan, and South Korea creates vulnerabilities where conflict on the Korean Peninsula or Taiwan Strait could disrupt global supply chains with systemic economic impacts. ASEAN has emerged as a key beneficiary of trade shifts, deepening its role in global manufacturing and expanding trade with both the US and China as a trusted alternative partner.