AUTHOR: Atty. Julia Antoinette S. Unarce
Managing Associate, Gorriceta Africa Cauton & Saavedra

Over a month since the conflict in the Middle East began, its impact is being felt across global energy markets.  Thousands of miles away, it reaches our shores at a time when the Philippines was making significant headway toward the country’s ambitious renewable energy expansion.

2025 marked a promising turning point in the Philippines’ transition toward sustainable energy. The country sealed major renewable energy agreements with global partners, covering billions of dollars in investments for large-scale solar, wind, and battery storage projects. This momentum built further on significant policy shifts and reform in 2022, including one that allowed 100% foreign ownership of renewable energy projects. This enabled the Philippines to, among others, award 65 renewable energy contracts to fully foreign-owned firms. As a result, the Philippines rose to the second-most attractive position among emerging markets for clean energy investment. Notably, the Philippines climbed 29 places to rank 76th out of 118 countries in the World Economic Forum’s 2025 Energy Transition Index. Together, these developments painted an optimistic picture of the country’s energy future.

However, with the onslaught of the Middle East conflict in late February 2026, this trajectory came to a sudden and severe halt. The intensifying tensions between the United States, Israel, and Iran quickly evolved into a global concern, with far-reaching short-and long-term consequences for energy markets worldwide, including the Philippines.

At the center of this conflict lies the Strait of Hormuz, a critical maritime chokepoint located between Oman and Iran. This narrow passage facilitates the transit of approximately 20% of the world’s oil and liquefied natural gas supply. Under normal conditions, around 3,000 ships pass through the strait each month. However, ongoing hostilities have significantly reduced this volume, constraining global supply chains and driving up shipping costs and fuel prices.

In the Philippines, the effects have been particularly severe. The country imports roughly 90% of its oil, much of it from the Middle East, making it highly vulnerable to supply delays and heightened price volatility. Limited domestic refining capacity and the heavy reliance of key industries on imported fuel further worsen the situation.

Between March and April 2026, fuel prices surged dramatically. Diesel prices rose by approximately 59.5%, while gasoline increased by 27.3%. These spikes have concerning effects across the economy, particularly in remote and off-grid areas where nearly 90% of power generation relies on oil-based plants, primarily diesel. Oil also remains a crucial source of additional power during peak demand periods.

The result has been a burden on Filipino households. Rising fuel costs have driven transportation and production expenses, contributing to an increase in the prices of basic goods and commodities. Inflation climbed to 4.1% in March 2026, landing outside the government’s target range of 2% to 4%.

In response, the government issued Executive Order No. 110, s. 2026, declaring a State of National Energy Emergency. The order introduced the Unified Package for Livelihoods, Industry, Food, and Transport (UPLIFT), a comprehensive, whole-of-government framework designed to mitigate the crisis. This initiative empowers the Department of Energy to implement measures ensuring the stability and adequacy of energy supply, while coordinating with other government agencies to support affected sectors.

While these measures are necessary, they remain largely temporary and reactive. The Philippines must adopt a more proactive, long-term strategy to secure its energy future. Central to this is reducing dependence on imported fossil fuels and accelerating the development of local energy resources, including solar, wind, hydro, and geothermal power. These sources are locally available and less susceptible to global geopolitical disruptions, offering greater price stability and energy security.

Equally important is the modernization of the country’s energy infrastructure. Expanding renewable energy deployment must be complemented by investments in energy storage systems, upgraded transmission networks, and advanced grid technologies capable of supporting a more resilient and flexible power system.

Against this backdrop, what warrants greater attention is the Philippines’ vulnerability to external energy shocks. Ultimately, the country must intensify its drive to diversify energy sources, strengthen domestic capacity, and transition toward a more sustainable and self-reliant energy system. 

The Philippines cannot afford to wait for another global crisis to act. The path forward cannot be clearer than it is today: utilize the country’s vast natural resources, invest in modern clean energy technologies, and build a resilient energy system capable of sustaining a rapidly modernizing nation.

Atty. Julia Antoinette S. Unarce is a Managing Associate at Gorriceta Africa Cauton & Saavedra. She is a member of the Litigation and Labor Practice Group and the Arbitration Practice Group, and also practices under the Data Privacy, Cybersecurity and AI Initiatives, as well as the Fraud, Financial Crime, and Anti-Money Laundering Practice Area.

Atty. Julia brings extensive experience across multiple disciplines, advising a diverse range of clients, particularly corporate entities. She regularly counsels clients on dispute resolution, whether before courts or quasi-judicial agencies. She has also developed strong expertise in regulatory compliance, particularly in labor standards, data privacy, and anti-money laundering, areas of growing importance both locally and internationally.

Her clientele includes prominent players in the retail industry, including a leading local fashion and lifestyle brand, as well as local and international fintech companies, BPOs, and technology firms.