The Middle East Conflict and Its Implications for Global Supply Chains: An ASEAN Perspective

This study examines the systemic impact of Middle East conflicts on global supply chains and ASEAN’s economic stability during 2020–2025. Employing a novel methodological integration of panel regression (Fixed Effect/Random Effect), vector autoregression (VAR), and event study analysis, the research provides a multidimensional perspective on how geopolitical shocks propagate through energy markets, logistics costs, and macroeconomic indicators. The findings reveal that oil price shocks and geopolitical risks significantly increase global logistics costs, inflation, and currency depreciation across ASEAN economies. Empirical evidence shows that a US$10 increase in Brent oil prices raises ASEAN inflation by 0.27% and weakens the Indonesian Rupiah by Rp350/USD, while VAR impulse responses confirm cumulative effects of +2.8% inflation and Rp2,500/USD depreciation within five quarters. Event studies highlight abnormal shocks in inflation (Philippines 7.7%), trade deficits (Indonesia US$13.2 billion), and disruptions in manufacturing sectors such as automotive, textiles, and electronics. The originality of this research lies in its simultaneous application of three quantitative approaches to capture causal relationships, dynamic responses, and event-specific abnormalities, offering a comprehensive framework rarely applied in ASEAN-focused studies. Beyond academic contribution, the study underscores policy implications: ASEAN must accelerate energy diversification, strengthen LNG cooperation with regional partners, invest in renewable energy, and enhance regional logistics integration. These strategies are essential to reduce dependency on Middle Eastern energy routes and to build resilience against future geopolitical shocks.