Introduction
The ongoing US-Israel military operation against Iran has reignited questions about the boundaries of military force under international law and the implications of great-power military action for states far beyond West Asia.
On 28 February 2026, coordinated airstrikes by the United States and Israel triggered retaliatory strikes from Iran and drew global reactions calling for de-escalation and renewed diplomacy to avert broader regional conflict.
However, Iran’s subsequent move to close the Strait of Hormuz marks a serious escalation, transforming an already volatile confrontation into a direct threat to one of the world’s most critical energy chokepoints.
In response to the shuttering, Trump said risk insurance would be provided “at a very reasonable price” to ensure there is no snag to the flow of energy.
Iran’s Revolutionary Guard Corps threatened to set ablaze any cargo ships that risk passing the area. Such warning reverberates not only through West Asia’s geopolitical landscape but also across Southeast Asia’s strategic environment, challenging middle powers like Malaysia to reconcile legal norms, economic exposure and diplomatic positioning.
The Erosion of International Legal Constraints
Under the Charter of the United Nations, the use of force by one state against another is prohibited except under very narrow circumstances: self-defence in response to an armed attack (Article 51) or when authorised by the United Nations Security Council. Article 2(4) explicitly commands UN members to refrain from the threat or use of force against the territorial integrity or political independence of any state.
The Charter was designed to prevent exactly the sort of unilateral military action that risks escalating into wider wars. When powerful states undertake strikes without clear Security Council backing, it weakens collective security frameworks and sets a dangerous precedent for others to follow.
Likewise, constitutional norms in the United States – where Congress has the authority to declare war under Article I, Section 8 of the US Constitution – raise questions about executive use of force without explicit legislative approval.
The War Powers Resolution of 1973 was enacted to check unilateral presidential military action and requires notification to Congress within 48 hours of introducing armed forces into hostilities. Whether one agrees with specific strikes or not, the broader issue is that legal frameworks built over decades to restrain war are under stress, and that erosion affects states that rely on the stability such norms provide.
Energy Security and Market Shock Transmission
For Malaysia, the strategic implications unfold across three interconnected dimensions: economic vulnerability, diplomatic legitimacy and regional power dynamics.
Malaysia’s economy is not immune to geopolitical shocks emanating from West Asia. The Strait of Hormuz carries approximately one-fifth of global petroleum liquids consumption, making it the world’s most important oil transit chokepoint.
A declared closure by Iran represents not only a physical disruption but also a signal to markets that a supply risk has escalated dramatically. Even temporary interruptions, threats to tankers, or naval stand-offs in and around the Strait can send benchmark oil prices sharply upward. This has manifested visibly: the Brent crude oil price stood at US$104.71 at the time of writing.
Crucially, the economic consequences do not depend solely on an airtight blockade. Modern shipping is governed as much by insurance markets as by naval power.
The global maritime industry recognises that conflict zones trigger heightened war-risk premiums and insurance surcharges, significantly affecting freight rates and trade flows. In high-risk designations, insurers may either raise premiums substantially or decline coverage, rendering cargo effectively uninsurable.
Shipowners may delay voyages, reroute cargo or demand higher freight rates to offset risk exposure. The result mirrors a physical closure: constrained supply, increased transaction costs and rapid price spikes transmitted across global markets.
Malaysia remains a net exporter of crude oil and liquefied natural gas through Petronas, yet it is deeply integrated into global pricing systems. Energy price volatility feeds into domestic inflation, strains subsidy regimes and increases fiscal pressure.
Bank Negara Malaysia has repeatedly warned that global commodity price shocks translate into inflationary risks for the domestic economy. Higher shipping costs also affect imports of food, manufactured goods and intermediate inputs essential to Malaysia’s trade-dependent economy.
For a nation that is both an energy producer and a major trading hub, instability in Hormuz translates swiftly into cost-of-living pressures at home, already a major issue under Prime Minister Anwar Ibrahim’s government.
Diplomatic Legitimacy and Multilateral Norms
The diplomatic dimension is equally significant. Malaysia has long promoted the principles of sovereignty and peaceful dispute resolution as well as an adherence to international law. These principles are reflected in its support for multilateral institutions and its engagement within ASEAN.
The ASEAN Charter commits member states to respect for sovereignty, non-interference and peaceful settlement of disputes. Malaysia’s public condemnations of military escalation in West Asia, including calls for adherence to international law and renewed negotiations, align with this normative framework.
This alignment is not merely rhetorical. It reflects a structural reality: middle powers depend on functioning multilateral mechanisms to balance interests and restrain conflict.
When major powers act outside or ahead of these mechanisms, it creates a credibility gap. Diplomacy, even imperfect and protracted diplomacy, remains the principal instrument available to states that do not project military force across regions. If negotiations are sidelined by pre-emptive strikes or retaliatory escalations, it diminishes confidence in the very processes that small and middle powers rely upon for security.
For ASEAN, the escalation underscores a structural challenge: balancing neutrality with global responsibility.
The Zone of Peace, Freedom and Neutrality (ZOPFAN) Declaration of 1971 articulated the aspiration to keep Southeast Asia free from external interference. Yet global geopolitics has become deeply interconnected. The closure of the Strait of Hormuz carries consequences that are not confined to West Asia; it affects fuel prices in Kuala Lumpur, scrambles shipping schedules in Port Klang (one of the world’s busiest posts located directly on the Straits of Malacca) and shakes investor confidence across Southeast Asia.
Malaysia’s own maritime geography further sharpens the parallel. The Straits of Malacca and Singapore rank among the world’s most vital maritime chokepoints, carrying a significant share of global trade and energy flows.
International maritime law, particularly the United Nations Convention on the Law of the Sea (UNCLOS), enshrines freedom of navigation through straits used for international navigation. Yet legal guarantees do not insulate trade from market-based disruptions. If global conflict normalises the weaponisation of chokepoints or raises systemic insurance risks, trading states face cascading economic consequences even without direct military engagement.
Strategic Autonomy in An Era of Great Competition
Moreover, the conflict intersects with broader patterns of great-power competition shaping Southeast Asia’s strategic landscape. Diplomatic and economic initiatives in West Asia, including energy partnerships and infrastructure agreements, will assume greater importance if military routes appear unstable. Malaysia must therefore navigate carefully between competing strategic poles, preserving autonomy while protecting economic resilience.
Ultimately, the escalation involving Iran is not a distant geopolitical episode with confined consequences. The closure of the Strait of Hormuz and even the perception that transit is unsafe or commercially untenable demonstrate how quickly conflict in one region reverberates through global markets. Insurance regimes, freight rates and commodity benchmarks become conduits through which war transmits economic shocks.
For Malaysia, navigating this landscape requires reaffirming commitments to international law and diplomacy while strengthening economic buffers against external volatility. In an era marked by great-power competition and fragile legal norms, middle powers face a dual task: defending the rules that restrain force and preparing pragmatically for the economic aftershocks when those rules are breached.
