Weaponisation of Energy: Economic Vulnerability and Policy Responses in Developing Economies in the Context of the US-Iran Conflict
DOI:
https://doi.org/10.59926/jodprp.vol10/2026/3Keywords:
Energy Weaponisation, Economic Vulnerability, Geopolitical Risk, Energy Security, Developing Economies, Economic Resilience, US–Iran ConflictAbstract
This study investigates the economic vulnerability of developing economies due to the weaponisation of energy that can stem from the US–Iran conflict and outlines policies to enhance resilience. It applies document analysis and thematic analysis to 27 unique institutional, policy and academic documents. Four themes were developed: (1) energy as a geopolitical instrument; (2) inflation and economic vulnerability; (3) dependency on energy and economic vulnerability; and (4) policy responses and economic resilience. The analysis indicates that energy weaponisation affects developing economies beyond energy prices alone, through exchange rates, import bills, fiscal space, supply chains and investor confidence. Such impacts are especially strong in energy-importing countries with small foreign-exchange reserves, low institutional capacity and limited fiscal space. The examples of Pakistan, Sri Lanka and Bangladesh illustrate the interaction of external energy shocks with domestic macroeconomic vulnerabilities. The study also indicates that short-term subsidies and emergency interventions do not mitigate structural exposure. Investment in renewables, energy diversification, regional cooperation and stronger institutions are thus complementary measures that address structural exposure, while strategic reserves only cushion short-term supply disruptions.
JEL Classification Codes: E31; F51; O19; Q41; Q43; Q48
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Copyright (c) 2026 Muhammad Ali Khan, Dr Syed Adnan Ali Shah Bukhari, Dr Syed Aziz Rasool
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