Why Middle East crisis matters to PH economy — and how insurance can cushion the blow

WHEN people hear “Middle East crisis,” they think geopolitics. Insurers think in transmission lines: oil, shipping, credit and household cash flow. For an oil-importing, trade-dependent Philippines, a distant conflict can raise costs at home within days.

The chain of events is straightforward. Conflict risk rises, then markets price the possibility that ships will avoid key choke points or that ports and terminals become unsafe. The Strait of Hormuz is the world’s most critical oil corridor: the International Energy Agency estimates that around 20 million barrels per day of crude and oil products transited the Strait in 2025 — about a quarter of global seaborne oil trade — with limited ability to bypass it if disrupted. Red Sea insecurity compounds the problem. The International Monetary Fund has noted that attacks in the Red Sea reduced traffic through the Suez Canal, a route that normally carries about 15 percent of global maritime trade volume, and diversions around the Cape of Good Hope add 10 days or more to delivery times.

Because losses can be “correlated” (one escalation, many affected vessels and cargoes), insurance markets react fast: war risk premiums rise, terms tighten and carriers reroute. Those costs then show up as freight surcharges and higher landed prices for everything from fuel to food inputs.

Why does this matter so much for the Philippines?

Start with energy. Department of Energy (DOE) data show net imported oil is roughly 30 percent of the country’s primary energy supply. More pointedly, our crude sourcing is heavily Middle East-weighted: DOE statistics for 2023 show Saudi Arabia supplied about 50.8 percent of Philippine crude oil imports and the United Arab Emirates about 30.7 percent, with Iraq also significant. Even if the Philippines is not directly importing from a specific flash point, a disruption to Gulf logistics and pricing raises our import bill.

Inflation is the next channel. Higher fuel costs lift transport and power costs, and squeeze business margins, complicating efforts to keep prices stable. The Philippines could be more exposed to an oil shock than some Asia-Pacific peers — precisely because of import dependence and the speed with which fuel feeds into broader prices.

Then there are households. The Middle East is also a major source of remittances. Bangko Sentral ng Pilipinas data show cash remittances from the Middle East reached about $6.48 billion in 2025 — around 18 percent of total cash remittances. If the crisis weakens labor markets abroad or disrupts mobility, the impact will be felt in family budgets, loan payments and consumer spending.

So where does insurance fit when the root cause is geopolitical?

Insurance cannot prevent conflict or stop oil prices from moving. But it can turn uncertainty into a financed outcome — by protecting assets, cash flow and people.

For importers, exporters and logistics-heavy businesses, start with marine cargo insurance that matches today’s routes. Rerouting changes where inventory sits and for how long, so firms should check insured values, storage provisions at transshipment points, and whether war risk and SRCC (strikes, riots and civil commotion) extensions are in place.

Next, protect receivables and contracts. Trade credit insurance can soften the blow when buyers delay or default amid banking disruption, sanctions or liquidity stress. For companies with projects or investments abroad, political risk insurance can address exposures like expropriation, political violence or currency inconvertibility.

Third, protect continuity. Traditional business interruption often requires physical damage, so firms should assess contingent business interruption and supply chain endorsements that reflect their real dependencies. Where the biggest risk is volatility, parametric covers — payouts triggered by an objective index such as freight rates or an energy benchmark — can provide fast liquidity. Insurers can also help clients stress-test scenarios, map concentration risks and pre-agree claims protocols so payments arrive when they matter most.

Finally, protect people. Employers with staff traveling or stationed overseas should review medical, accident, evacuation and repatriation benefits; households can strengthen resilience through life and health coverage.

From an insurer’s perspective, the call to action is simple: don’t wait for the next premium spike to discover what is — and isn’t — covered. Geopolitical risk moves faster than procurement cycles. A focused review of supply chains, policy exclusions and crisis protocols today is a practical way to keep Philippine commerce and households resilient tomorrow. In an interconnected world, resilience is not a slogan; it is a balance-sheet decision.

Source: www.manilatimes.net