The on-again, off-again ceasefire between the United States and Iran is the kind of limbo that is most punishing for small, open economies — not the sharp shock of total war but the chronic burn of sustained uncertainty.

For Southeast Asia — and the Philippines in particular — that burn is already producing structural damage.

The cost of the Philippines’ vulnerability is stark. The country sources roughly 98 percent of its crude oil from the Middle East. When the Strait of Hormuz tightens — whether from sea mines, targeted strikes, or the credible threat of either — the Philippines has almost nowhere to turn.

President Marcos signed an executive order placing the Philippines under a state of national energy emergency as the oil supply dwindled and inflation climbed to an all-time high. The government’s emergency measures — ordering public agencies to set their air-conditioners at no lower than 24 degrees Celsius, adopting flexible work arrangements, and enforcing a four-day work week — are not crisis management. They are symptoms of a structural dependency that decades of policy drift have failed to address.

The energy shock is only half the story. An estimated 2.4-million Filipinos are in the Middle East, many of them OFWs sustaining millions of households back home through their remittances.

Economists have warned the conflict endangers the OFW remittance flow, amounting to some $35 billion a year, threatening the critical consumption lifeline of millions of Filipino families.

The short-term data offers some relief — remittances from Middle East-based Filipinos actually climbed nearly 20 percent in March 2026, as OFWs frontloaded transfers in anticipation of worsening prices at home — but that surge reflects fear, not resilience.

Some estimates suggest that between 200,000 and 340,000 OFWs could lose their jobs if the war continues, a displacement that would compound the energy crisis with a demand-side collapse in household income.

The geopolitical fallout is equally consequential. Even the Philippines and Thailand — both formal US treaty allies — have distanced themselves from the conflict, calling for restraint and de-escalation.

That instinct is pragmatic, not principled. President Marcos has signaled the need for a “reset” in the Philippines’ relations with China, noting that regional states are confronting very serious economic and foreign policy restructuring, and even suggesting that the Iran war could provide an impetus for the Philippines and China to reach an agreement on disputed energy resources in the South China Sea.

Washington should read that carefully. An alliance is not eroded by dramatic ruptures — it is eroded incrementally every time an ally is forced to choose between a security partnership and its economic survival.

The broader regional picture confirms that the Philippines is not an outlier but a leading indicator. Should the ceasefire break down and the Strait of Hormuz remain closed, there is an increasing risk that large parts of Asia could face an economic recession, with Japan and South Korea among the most energy-exposed economies in East Asia.

ASEAN, for its part, is being given an unwanted accelerant for its clean energy transition — the bloc has committed to a 45-percent renewable energy target by 2030 — but transitions take time, and the crisis is happening now.

The world’s tolerance for this pattern of ceasefire-and-collapse is not unlimited. Each failed negotiating round in Islamabad or elsewhere defers not just the peace but investment decisions, monetary policies, and sovereign ratings trajectories.

The Philippines was on the cusp of an A-level credit rating before the crisis broke — an ambition now overshadowed by the prospect of a double shock of sustained energy inflation and collapsing remittances.

A fragile ceasefire is not a peace strategy. For a country like the Philippines, whose economy runs on imported oil and exported labor, the distinction matters enormously. The fire may be in the Persian Gulf. The heat is being borne here.