The first six months of 2026 have not been a slow build. They have been a rupture.
The defining event of H1 2026 is the Iran war. The conflict that began on 28 February has triggered a chain of consequences with reverberating effects across the region and the globe. Three months on, there is no end in sight. As we go to press, fighting between Iran and the US has renewed, ending the fragile ceasefire previously in place. The prospect of a permanent peace deal being reached is now even bleaker than before.
The war shuttered the artery through which 1/5 of the world’s oil flows. The Strait of Hormuz has been effectively closed since March, with tanker traffic at roughly 5% of its pre-conflict level and the strait in de facto Iranian control. Brent crude soared, briefly touching $126 per barrel, sending the world into an energy crisis. → We covered this in our ASEAN Dual Shock advisory note.
Governments globally have released 280 million barrels from strategic reserves since March, and that buffer is depleting. The second-order risk of recession is no longer a scenario. It is taking place.
The Xi-Trump summit, held in Beijing in mid-May, failed to produce any structural breakthrough on the most contested issues. The only thing it delivered was the appearance of “managed stability” — a shared interest in avoiding escalation, temporarily. The USTR’s Section 301 investigations, meanwhile, are advancing, and a further wave of tariffs targeting ASEAN exporters is widely expected before year-end. → Read our analyses of both issues here and here.
In the face of these challenges, ASEAN — the region’s main security architecture — has come up short. The 48th ASEAN Summit in Cebu failed to agree on a binding, funded regional fuel reserve mechanism, as proposed by Indonesia and the Philippines. The long-awaited South China Sea code of conduct was described by a leading expert as “100 per cent not likely” to be finalized this year, even as Chinese vessels erected a floating barrier at Scarborough Shoal in April, raising tensions once again.
The commodities sector is also under pressure. President Prabowo has announced plans to centralize control over exports of coal, palm oil, and iron alloys through a state-owned enterprise, operational by September. → The 21st-century resource war we described here has not stopped.
For technology companies, the regulatory environment has shifted fundamentally. China’s blocking of Meta’s acquisition of Manus has changed the rules. Tech companies are no longer purely commercial assets — they are national strategic instruments. → We discussed what the Manus deal signifies for tech companies in Asia.
The second half of 2026 will be no easier to navigate. We are on a collision course, and it’s unclear if the political leaders in the driving seats will finally turn the vehicle around, or are heading straight ahead.
The businesses best positioned for what comes next are those that have already mapped their exposures — and Aurora Insights is here to help you do exactly that.
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