U.S.-China-Middle East Dynamics and the Emerging ASEAN Opportunity in a Multipolar Energy World - Overview by Nik Zafri

The optics of Donald Trump and Xi Jinping “seeing eye to eye” matter because the U.S. and China together still shape global trade, energy demand, manufacturing, technology supply chains, and financial confidence.

Right now, the world is watching three connected issues at once:

1. U.S.- China relations
2. The Iran/Strait of Hormuz crisis
3. Oil and shipping stability

1.0 POSSIBLE IMPACT ON THE GLOBAL ECONOMY

1.1 Short-Term Market Relief

If Trump and Xi manage to reduce tensions:

• Markets may calm temporarily
• Supply chains become more predictable
• Manufacturing confidence could improve
• Shipping insurance and freight costs may stabilize

This would especially help:

• Electronics
• Semiconductors
• Automotive manufacturing
• Commodities
• Global shipping

Investors usually react positively when the world’s two largest economies appear cooperative rather than confrontational.

However, some analysts believe this is more of a “managed rivalry” than a true alliance. Deep issues like Taiwan, tariffs, AI competition, and technology restrictions remain unresolved.

1.2 Impact on ASEAN Economies

For ASEAN, this could be both positive and risky.

a. Positive Effects

Manufacturing/FDI could increase

ASEAN may continue benefiting from:

• Supply chain diversification
• Data centre investments
• Electronics assembly
• EV and battery investments

Malaysia in particular could gain from:

• Semiconductor packaging
• Data centre expansion
• Green energy infrastructure
• Logistics and ports

If the U.S. and China manage to stabilize trade tensions, ASEAN becomes a “bridge economy” rather than a battleground.

b. Possible Negative Risks

If the Iran crisis worsens and oil spikes:

• Inflation returns
• Shipping costs surge
• Food prices rise
• Currencies weaken
• Energy-importing ASEAN nations suffer

Countries highly dependent on imported fuel could face economic pressure.

Even Malaysia, despite being an oil producer, could still experience:

• Higher transport costs
• Increased subsidy burdens
• Imported inflation
• Currency volatility

2.0 OIL CRISIS SCENARIO

The key issue is the Strait of Hormuz.

Around one-fifth of global oil and LNG passes through that narrow route. Analysts warn that prolonged disruption there could create one of the largest modern energy shocks.

If the strait remains unstable:

• Oil prices may stay above USD100/barrel
• LNG prices may surge
• Shipping insurance rises sharply
• Airlines and manufacturing suffer
• Global inflation returns

This is why even China, a major buyer of Iranian oil reportedly wants the strait reopened quickly.

3.0 WHAT COULD IRAN DO?

Iran still has several strategic tools despite sanctions and military pressure.

3.1 Likely Response

a. Pressure via shipping lanes

Iran may:

• Threaten tanker traffic
• Increase naval patrols
• Use indirect pressure on shipping routes

Even limited disruption can shock oil markets because traders react to uncertainty immediately.

3.2 Strengthen ties with China and Russia

Iran may move closer to China and Russia especially in:

• Oil trade
• Alternative payment systems
• Non-dollar settlements

Some analysts believe this accelerates a gradual move toward a more “multipolar” financial system.

3.3 Strategic patience instead of full escalation

Iran also understands:

• Closing Hormuz completely could hurt China
• China is one of its most important economic partners
• A full regional war could damage Iran internally

So Iran may prefer:

• Controlled pressure
• Symbolic retaliation
• Negotiation leverage instead of total escalation.

4.0 BIGGER LONG TERM PICTURE

The larger issue may not simply be oil. The real transformation could be:

• A shift in global trade blocs
• Reduced dependence on the U.S. dollar
• More regionalized supply chains
• ASEAN becoming strategically more important

Countries like Malaysia may benefit if they remain:

• Neutral
• Stable
• Investment-friendly
• Technologically capable

In many ways, ASEAN is becoming the “middle ground” between the U.S. and China. That gives opportunities but also pressure to balance both sides carefully.

China absolutely can talk to Iran, and in fact it may be one of the few major powers that Iran still listens to seriously.

The relationship between China and Iran is based on:

• Energy
• Trade
• Strategic diplomacy
• Shared opposition to excessive Western pressure

China buys large amounts of Iranian oil and has maintained ties even during sanctions periods.

More importantly, China has already been actively communicating with Iran in recent weeks:

• Chinese Foreign Minister Wang Yi held talks with Iranian Foreign Minister Abbas Araghchi in Beijing.
• China has publicly pushed for diplomacy, de-escalation, and reopening the Strait of Hormuz.

There are also reports that Iran recently allowed certain Chinese-linked vessels to pass through the Strait after Chinese diplomatic requests.

5.0 CHINA MATTERS TO IRAN

Iran needs China because:

• China is one of its biggest economic lifelines
• China purchases oil that others avoid
• China offers diplomatic cover at the UN
• China provides access to alternative financial systems outside the U.S. dollar system

At the same time, China needs Iran because:

• China depends heavily on Middle East energy
• Stability in Hormuz is critical for China’s economy
• A major oil shock hurts Chinese manufacturing and exports

So both countries need each other but not equally.

Iran still acts independently based on:

• Revolutionary ideology
• Domestic politics
• National security concerns
• Regional influence

China can:

• Persuade
• Deeper economical discussion
• Offer incentives
• Mediate quietly

China probably can definitely play a role on Iran as China’s main goals are:

1. Prevent a regional war
2. Keep oil flowing
3. Avoid collapse of global trade
4. Protect Chinese economic growth
5. Avoid direct military involvement

China generally prefers:

• Quiet diplomacy
• Back-channel negotiations
• Economic leverage
• Mediation

rather than open military confrontation.

That would increase China’s geopolitical influence significantly, especially across:

• The Middle East
• BRICS
• ASEAN trade networks
• Global energy markets

For ASEAN countries like Malaysia, Indonesia, Thailand, and Vietnam, this matters because regional stability and oil prices directly affect:

• Inflation
• Fuel costs
• Food prices
• Shipping
• Investment flows
• Currency strength

A calmer U.S.- China - Iran triangle would generally help ASEAN economies breathe easier.

6.0 PALESTINE

The situation is extremely complicated, and different sides tell very different stories. But many critics around the world argue that:

• further military action worsens instability in Palestine,
• civilians suffer the most,
• and the U.S. applies different standards in different conflicts.

A major source of heightened emotions internationally is that even when there are temporary truces involving Iran or Lebanon, Palestinians in Gaza and other areas still face insecurity, humanitarian hardship, displacement, and ongoing violence. Many people ask why peace efforts appear uneven or incomplete. A truce in one area does not automatically stop fighting in another.

Another issue is political trust. Negotiations involving:

• Israel,
• Hamas,
• the Palestinian Authority,
• Iran,
• the U.S.,
• Egypt,
• Qatar,
• and other regional actors

often break down because each side fears the other will use a ceasefire to regroup strategically.

There is also a humanitarian dimension. International organizations and many governments continue calling for:

• protection of civilians,
• stable humanitarian aid corridors,
• hostage and prisoner negotiations,
• and a longer-term political solution for Palestinians and Israelis.

Without a broader political settlement, temporary ceasefires tend to remain fragile.

From an economic perspective, prolonged instability affects not only the Middle East but also ASEAN through:

• higher oil prices,
• shipping disruptions,
• inflation,
• weaker investor confidence,
• and food and fuel cost increases.

That is why countries including China, Gulf states, Turki, and many ASEAN governments generally prefer deescalation and stable trade routes rather than a prolonged regional war.

7.0 ALTERNATIVE ENERGY

Alternative energy sources can reduce the world’s vulnerability to oil and gas crises especially conflicts involving the Middle East, the Strait of Hormuz, or major oil-producing countries.

Right now, much of the global economy still depends heavily on:

• oil for transport,
• gas for electricity and industry,
• and fossil fuels for manufacturing.

When war or instability disrupts supply, the effects spread everywhere:

• fuel prices rise,
• shipping becomes expensive,
• inflation increases,
• food costs climb,
• and currencies weaken.

That is why many countries are accelerating renewable and alternative energy development.

7.1 How Different Energy Sources Help?

a. Solar Energy

Solar helps because:

• sunlight is free,
• systems can be decentralized,
• and countries reduce fuel imports.

Benefits:

• Lower long-term electricity cost
• Reduced dependence on imported oil/gas
• Useful for homes, factories, and data centres
• Fast deployment compared to large power plants

Challenges:

• Weather dependency
• Battery storage needed at night
• Large land area for utility-scale farms

Countries like China have massively expanded solar manufacturing, lowering global costs dramatically.

Malaysia, Indonesia, Thailand, and Vietnam all have strong solar potential because of year-round sunlight.

b. Hydropower

Hydro is one of the oldest renewable energy sources.

Benefits:

• Stable electricity generation
• Low emissions
• Can support national grids continuously
• Reservoirs can assist water management

Challenges:

• Environmental impact
• Flooding and ecosystem disruption
• Expensive construction
• Drought vulnerability

Countries like Norway and Laos rely heavily on hydropower.

Malaysia already uses hydro significantly.

c. Geothermal Energy

Geothermal uses underground heat from the Earth.

Benefits:

• Continuous power 24/7
• Very low emissions
• Less land use compared to solar

Challenges:

• Limited to suitable geological areas
• High exploration cost
• Complex drilling

Indonesia and the Philippines are among the world’s strongest geothermal regions because of volcanic activity.

d. Waste-to-Energy (WTE)

Waste-to-energy converts:

• municipal waste,
• biomass,
• landfill gas,
• or industrial waste into usable electricity or fuel.

Benefits:

• Reduces landfill burden
• Generates electricity
• Helps urban waste management
• Can produce biogas

Challenges:

• Emission concerns
• Public opposition
• Requires strict environmental controls

This is becoming increasingly important for growing ASEAN cities.

e. Electric Transportation

Electric vehicles reduce oil demand directly. If electricity increasingly comes from renewables:

• dependence on oil drops,
• energy security improves,
• and transport becomes cleaner.

But EV growth also creates new dependencies:

• lithium,
• rare earths,
• nickel,
• battery supply chains,
• and power grid stability.

ASEAN countries like Indonesia and Malaysia are positioning themselves in the EV supply chain economy.

7.2 Why It Matters Now?

If countries depend less on imported oil:

• they become harder to economically pressure,
• inflation shocks become smaller,
• shipping disruptions matter less,
• and energy security improves.

For example:

• A solar-powered home is less affected by oil tankers being blocked.
• An EV fleet reduces national fuel imports.
• Hydropower reduces gas-fired generation needs.

This is why energy transition is now viewed not only as an environmental issue, but also:

• a national security issue,
• an economic resilience issue,
• and a geopolitical strategy.

8.0 THE REALITY : FOSSIL FUELS WILL STILL MATTER

Even with rapid renewable growth:

• oil,
• gas,
• petrochemicals,
• aviation fuel,
• shipping fuel,
• and heavy industry

still rely heavily on fossil fuels. The transition will likely take decades.

So the future is probably a mixed system:

• renewables,
• batteries,
• nuclear in some countries,
• gas as transition fuel,
• hydrogen,
• and smarter energy grids.

9.0 ASEAN’s OPPORTUNITY

ASEAN countries could benefit greatly because the region has:

• abundant sunlight,
• rivers,
• geothermal zones,
• biomass resources,
• growing manufacturing,
• and strategic shipping routes.

Countries that successfully combine:

• renewable energy,
• industrial policy,
• grid modernization,
• and political stability

may become future energy and manufacturing hubs.

10.0 CONCLUSION

The current global landscape is increasingly defined by the interaction between geopolitical tension and energy security. The relationship between the United States and China, while often described as a managed rivalry, remains the central stabilizing or destabilizing force for global trade, technology flows, and investor confidence. At the same time, instability in the Middle East, particularly around the Strait of Hormuz, continues to expose how vulnerable the global economy remains to disruptions in oil and LNG supply chains.

In this environment, countries such as China and Iran play pivotal but asymmetric roles, China as a major economic stabilizer and energy importer, and Iran as a strategic actor capable of influencing global energy routes. Their interactions, alongside U.S. policy directions, will continue to shape short-term market stability and long-term geopolitical alignment.

For ASEAN, the evolving situation presents both opportunity and risk. As global supply chains diversify away from concentrated hubs, the region through countries like ASEAN members such as Malaysia, Indonesia, Thailand, and Vietnam stands to benefit as a “middle-ground economy” attracting investment, manufacturing relocation, and digital infrastructure expansion. However, this advantage is fragile and highly sensitive to oil price volatility, shipping disruptions, and external shocks.

Looking further ahead, the global energy transition adds another layer of transformation. While fossil fuels will remain dominant for decades, the acceleration of solar, hydro, geothermal, waste-to-energy systems, and electrified transport signals a gradual shift toward a more distributed and resilient energy architecture. This transition is no longer purely environmental it is becoming a core pillar of national security and economic sovereignty.

Ultimately, the world is moving toward a more multipolar system where economic power, energy security, and geopolitical influence are increasingly interconnected. The key question is not whether instability will occur, but how effectively nations especially in ASEAN can position themselves to remain stable, neutral, and competitive amid shifting global fault lines.

About the Author : Nik Zafri possesses 30 years of experience/hands-on in the multi-modern management & technical disciplines (systems & methodologies) such as Knowledge Management (Hi-Impact Management/ICT Solutions), Quality (TQM/ISO), Safety Health Environment, Civil & Building (Construction), Risk Management (including comprehensive flood risk analysis - flood risk and Mitigation Design Risk - which is the first in Malaysia) Manufacturing, Motivation & Team Building, HR, Marketing/Branding, Business Process Reengineering, Economy/Stock Market, Contracts/Project Management, Finance & Banking, etc. He was employed to international bluechips involving in national/international megaprojects such as Balfour Beatty Construction/Knight Piesold & Partners UK, MMI Insurance Group Australia, Hazama Corporation (Hazamagumi) Japan (with Mitsubishi Corporation, JA Jones US, MMC and Ho-Hup) and Sunway Construction Berhad (The Sunway Group of Companies). Among major projects undertaken : Pergau Hydro Electric Project, KLCC Petronas Twin Towers, LRT Tunnelling, KLIA, Petronas Refineries Melaka, Putrajaya Government Complex, Sistem Lingkaran Lebuhraya Kajang (SILK) etc. Once serviced SMPD Management Consultants as Associate Consultant cum Lecturer for Diploma in Management, Institute of Supervisory Management UK/SMPD JV. Currently – Associate/Visiting Consultants/Facilitators, Advisors for leading consulting firms (local and international) including project management. To name a few – TIJ Consultants Group (Malaysia and Singapore), LSB Manufacturing Solutions Sdn. Bhd., Amiosh Resources Sdn. Bhd. Perunding Teman, NMR, Noma SWO Consult and many others.

He is also rediscovering long time passions in Artificial Intelligence, ICT and National Security, Urban Intelligence/Smart Cities, Environmental Social and Governance, Solar Energy, Data Centers - BESS, Tiers etc. and how these are being applied.

He actively engages with both local and international certification bodies. Most recently, he has been working together with ABAC Malaysia, a reputable UK-based certification body specializing in Anti-Bribery and Anti-Corruption, providing technical expertise in the joint evaluation of ISO 37001:2025, while also promoting Anti-Bribery Management Systems (ABMS) within the construction industry.

He is currently holding the position of Principal Consultant - Systems and Methodology at QHSEL Consultancy Sdn. Bhd.

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