ISP

Email: info@ispadvisory.com

Phone: +662 823 4567

Founding Patron: M.R. Kasemsamosorn Kasemsri

Founding Patron: M.R. Kasemsamosorn Kasemsri

The 2026 Middle East Crisis Update: A Strategic Analysis of Impact on the World, the ASEAN region and Thailand

Home / Research & Analysis / Briefing Paper

Briefing Paper

No. 1/2026 · 4 March 2026

The 2026 Middle East Crisis Update: A Strategic Analysis of Impact on the World, the ASEAN region and Thailand

DOWNLOAD PDF

Introduction

For almost one week now, the Middle East has been engulfed in a high-intensity  conflict following a massive U.S.-Israeli military campaign launched on February 28,  known as “Operation Epic Fury.”1 The initial strikes, which targeted Iranian  command centers and nuclear research sites, reportedly killed Supreme Leader  Ayatollah Ali Khamenei and several high-ranking officials.2 This has triggered a  wave of Iranian retaliatory strikes across the Gulf, targeting U.S. embassies and  energy infrastructure in Saudi Arabia, Qatar, and the UAE.3

This paper examines the evolving military expectations, the resulting energy shocks,  and the specific strategic risks and opportunities for the ASEAN region and Thailand.

1. What the US and Iran are Expect to Do Next

Geopolitical analysts are currently tracking a shift from initial strikes to a  “punishing” phase of attrition.4

The United States: Sustained Attrition and Air Superiority

  • Expansion of the Air Campaign: President Trump has stated the U.S. has the  “capability to go far longer” than the initial 4 to 5 weeks projection.5 The U.S.  expects to continue striking missile launch sites and internal security  infrastructure to prevent the Iranian regime from reconstituting its authority.6
  • “Hardest Hits” Phase: Secretary of State Marco Rubio warned that the “next  phase will be even more punishing,” focusing on preempting any Iranian  retaliation by striking “proactively in a defensive way.”7
  • Ground Troops Contingency: While there is currently no prediction of a full scale ground invasion, U.S. officials have not explicitly ruled it out if “regime  change” objectives are not met through airpower alone.8, 9

Iran and Allies: Regionalizing the War

  • Asymmetric Retaliation: Iran expects to leverage its proxy network to make  the conflict unsustainable for U.S. allies. Hezbollah in Lebanon has already  defined the killing of the Supreme Leader as a “red line” and is expected to  broaden rocket fire into Israel.10, 11
  • Targeting the Gulf: Iran and its allies are expected to continue targeting U.S.  military assets and civilian airports in countries like Kuwait, Qatar, and the  UAE to fracture the regional alliance.12, 13
  • The “Hormuz Card”: Despite the destruction of several naval ships, Iran  intends to keep the Strait of Hormuz effectively closed to shipping via mines  and shore-based missiles, threatening to “set on fire” any tanker attempting  the passage.14, 15

2. Impact on Oil Prices

The Middle East remains the “energy heart” of the global economy, and the current  instability has immediately re-indexed crude prices. 

  • Immediate Surge: On Monday, March 2, Brent crude prices spiked by 14%,  reaching approximately $82.37 per barrel.16
  • Chokepoint Closure: With the Strait of Hormuz—the transit point for 20% of  global petroleum—effectively blocked, prices remain highly volatile.17
  • Price Forecasts: If the conflict persists for over a month, analysts predict Brent  could hit $113. A three-month disruption could see a historic spike to $185 as  global reserves are depleted.18

3. Impact on the World Economy

The conflict delivers a “double-shock” of inflation and supply chain disruption to a  global economy already facing trade tensions.19

  • Inflationary Spike: Rising energy and transport costs act as a “geopolitical  tax,” likely forcing central banks to maintain high interest rates, which slows  global growth.20, 21
  • Supply Chain Disruption: Maritime insurance premiums have, thus far,  jumped by 50%, and the closure of regional airspace has grounded thousands  of flights, delaying high-value cargo between Asia and Europe. 22, 23

4. Impact on ASEAN and Thailand

As a net energy importer and manufacturing hub, ASEAN is highly exposed to this  volatility.

Thailand’s Vulnerabilities and Responses

  • Energy Security: Thailand relies on the Middle East for 80% of its crude oil.24 As of March 4, the government has activated an “Energy War Room” and  confirmed 61 days of oil reserves. To protect domestic supply, Thailand has  temporarily suspended petroleum exports.25
  • GDP and Tourism: The NESDC warns that a prolonged war could slash  Thailand’s 2026 GDP growth to 1.3%.26 Tourism from the Gulf could plunge  by 80%, although Thailand may see a long-term “pivot” as travelers seek  Bangkok as a safer alternative to disrupted Middle Eastern hubs.27, 28
  • Labor: There are approximately 100,000 Thai workers in the region. The Thai  Foreign Ministry is currently surveying nationals for potential evacuation,  with initial repatriations from Iran already underway.29, 30

5. Recommendations for Thailand

Given the continued uncertainties, Thailand must position itself for a more volatile  future. The country must move beyond temporary reaction and implement robust contingency plans for both the immediate and medium terms.

  • Recommendations for the Immediate-Term:
    1. Energy Buffer Management: Utilize the Oil Fuel Fund to shield the  public from immediate retail price hikes, specifically watching the  $100/barrel “tipping point” for diesel.31
    2. Labor Protection: Fast-track the registration and evacuation plans for  citizens in high-risk zones like Iran, Iraq, and Kuwait.32, 33
    3. Financial Support: Leverage USD 300 billion in international  reserves to stabilize the Baht and provide liquidity to exporters facing  50% higher freight costs.34, 35
  • Recommendations for the Medium- Term:
    1. Leverage the country’s USD 300 billion in international reserves: to  stabilize the overall economy and protect the country’s industrial  heartbeat, especially those driven by foreign investments.
    2. Supply Chain Diversification: explore the possibility of shifting long term energy sourcing toward Africa and the Americas to reduce  dependency on the Strait of Hormuz and the Red Sea.36
    3. Strategic Hub Pivot: Market Suvarnabhumi Airport as the premier,  secure gateway for East-West transit while Middle Eastern hubs  remain unstable.37, 38

6. Conclusion

The current geopolitical landscape suggests that the conflict in the Middle East is no  longer a localized skirmish but has transitioned into a prolonged regional war of  attrition. With the Strait of Hormuz effectively closed and the U.S. air campaign  entering a sustained “punishing” phase, the possibility of further escalation remains  high. The risk of more countries being drawn into the kinetic conflict—either  through direct military involvement or as targets for asymmetric proxy attacks—is a  persistent threat that could lead to a permanent restructuring of global energy trade. 

Consequently, Thailand must move beyond temporary reaction and implement  robust contingency plans for both the immediate and medium-term. By fortifying  energy security and leveraging its USD 300 billion in international reserves to  stabilize the economy, Thailand can protect the country’s industrial heartbeat and  safeguard its national interest against the deepening global instability of 2026. 

Footnotes

  1. House of Commons Library, US-Israel strikes on Iran: February/March 2026, March 2,  2026. 
  2. Ibid. 
  3. Al Jazeera, US urges citizens to immediately leave Middle East countries, March 3, 2026.
  4. Ibid, House of Commons Library. 
  5. Ibid. 
  6. PBS News, Trump says Iran war could last weeks, March 3, 2026. 
  7. Ibid, House of Commons Library. 
  8. Ibid. 
  9. PBS News, Trump says Iran war could last weeks, March 3, 2026. 
  10. Ibid, House of Commons Library. 
  11. European Union Institute for Security Studies, War in the Middle East: What  implications for the EU?, March 2, 2026. 
  12. Ibid, Al Jazeera. 
  13. Ibid, PBS News. 
  14. Ibid, House of Commons Library. 
  15. Ibid, Al Jazeera. 
  16. Westpac IQ / Oxford Economics, Middle East Conflict: Initial View, March 3, 2026.
  17. Ibid, World Economic Forum. 
  18. Ibid, Westpac IQ / Oxford Economics. 
  19. Ibid, World Economic Forum. 
  20. Coface, Middle East Escalation: Energy Risks and Global Impact, March 4, 2026.
  21. Ibid, Westpac IQ / Oxford Economics. 
  22. Ibid, World Economic Forum. 
  23. Nation Thailand, Fears tourists may plunge 80%, dragging Thai GDP down, March 1,  2026. 
  24. Thailand Business News, Middle East Turmoil Implications for Thailand, March 3,  2026. 
  25. Nation Thailand, Thailand rolls out energy crisis plan: export curb, alternative  supplies, March 1, 2026. 
  26. Nation Thailand, Anutin convenes agencies to brace for Middle East spillover, March  2, 2026. 
  27. Ibid, PBS News. 
  28. Nation Thailand, Iran war rattles tourism as airspace closures threaten goals, March  3, 2026. 
  29. Ibid. 
  30. Thai PBS World, Thailand may seek African, Americas oil as tensions rise, March 2,  2026. 
  31. Ibid, Nation Thailand.
  32. Ibid, Nation Thailand. 
  33. Ibid, Thai PBS World. 
  34. Ibid, Nation Thailand. 
  35. Money and Banking Thailand, PM held discussions to address Middle East situation,  March 2, 2026. 
  36. Ibid, Thai PBS World. 
  37. Ibid, Thailand Business News. 
  38. Ibid, Nation Thailand.

Bibliography

Bank of Thailand. International Reserves and Financial Stability Report. March 2, 2026. 

CloudSEK. Situation Report: Middle East Escalation (February 27–1st March, 2026). March 2,  2026. 

House of Commons Library. Research Briefing: US-Israel strikes on Iran. March 2, 2026.

ING Think. War in the Middle East – implications for markets and macro. March 2, 2026. 

National Economic and Social Development Council (NESDC). Thailand Economic  Outlook Update. March 2, 2026. 

Oxford Economics. The 2026 Iran War: An Initial Take and Implications. March 2, 2026.

World Economic Forum. Global Trade and Supply Chain Reports. March 3, 2026.

Unit 42. Threat Brief: March 2026 Escalation of Cyber Risk Related to Iran. March 2, 2026.

DOWNLOAD PDF

ON THIS PAGE

DOWNLOAD PDF

ON THIS PAGE

DOWNLOAD PDF

Facebook
X
LinkedIn
Email

Further Reading