Brunei’s Quiet Power in a Crisis of Alignment
How neutrality became Brunei’s greatest strategic asset.
When Iran closed the Strait of Hormuz in March, the region began calculating who had oil. With crude production hovering between 110,000 and 127,000 barrels a day, the small sultanate of Brunei was never going to be a major substitute for a chokepoint that once carried more than 80% of the crude and liquefied natural gas the region consumed daily.
The Hormuz Strait crisis has altered the cost of energy relationships, extending beyond disrupted energy flows, as Iran continues to impose premiums on alignments that many states in Southeast Asia have had to pay, in one form or another. By the calculation that measures the political price of an oil barrel, Brunei is one of the most underpriced energy partners in Southeast Asia.
The most consequential development of the Hormuz crisis has been the mechanism that sits behind the disruption itself. Tehran has converted the Strait from a commercial right into a political instrument, using it as a ledger by selectively clearing passage for states it deems aligned and withholding it from those it does not. UNCLOS Article 38’s guarantee that transit passage through international straits is non- suspendable has been rendered conditional on the absence of alignment with Washington. States that have explicitly or implicitly declined to endorse the U.S.- Israeli strikes have found their tankers cleared; those that have aligned with Washington have not. What might be called a political economy of passage has emerged in place of the universal commercial right that international maritime law was supposed to guarantee.
Malaysia’s tankers cleared, but only after Prime Minister Anwar Ibrahim publicly framed the U.S.-Israeli strikes as a threat that would bring the Middle East to “the edge of grave and sustained instability”, a statement that risked straining Western partnerships while buying passage. Thailand, a U.S. treaty ally, had to negotiate directly with Iran’s ambassador in Bangkok before a Bangchak Corporation tanker transited safely on March 23, but not before a Thailand-flagged bulk carrier was hit and damaged by Iranian projectiles two weeks prior. Indonesia, under President Prabowo, had joined Trump’s Board of Peace initiative in February, only to pause participation after the strikes left Jakarta navigating a domestic contradiction as a Muslim-majority state under simultaneous pressure from both directions. This especially culminated in the protracted negotiations to secure passage for two Pertamina tankers that remained stranded in the Strait for weeks. Despite Indonesia’s established diplomatic ties with Tehran, the situation remained increasingly complex until late April.
China, uniquely, appears to have paid nothing at all. Its flagged vessels have continued transiting throughout, operating within a framework that has quietly become the defining architecture of passage in the crisis. Reportedly, payments have even been processed in yuan, an arrangement that Deutsche Bank analysts have described as the most operationally specific challenge to dollar energy hegemony since the petrodollar system was formalised in 1974.
Without Debts…
Amidst the standard diplomatic echo of “grave concern” across the region, the statement issued by Brunei’s Ministry of Foreign Affairs on March 1 went conspicuously further than usual. The MFA strongly condemned the attacks as a “serious violation of sovereignty” and reaffirmed Iran’s right to self-defence under Article 51 of the UN Charter—a legal framing that most ASEAN governments with Western-facing interests conspicuously avoided.
Brunei did this without visible negotiation and without a public quid pro quo, at a time when its own embassy in Tehran had been shuttered over nine months ago. Whether calculated or not, the statement has theoretically placed the sultanate in good standing in Tehran’s political ledger, at no apparent diplomatic cost to its relationships elsewhere. For states the size of Malaysia or Indonesia, a statement of that kind would have constituted a measurable foreign policy commitment with downstream implications. For Brunei, it appears to have constituted neither a departure from its existing positions nor a concession to any single partner.
A crucial example of this is the structural relationship that the sultanate holds with China. The Hengyi Industries petrochemical complex at Pulau Muara Besar, which remains as one of the single largest foreign direct investments in the country, contributes roughly 10% of the annual GDP. In 2024, it sat at the centre of an estimated USD 2.8 billion in bilateral trade. These numbers are comparable to what other ASEAN states carry. What distinguishes Brunei is what it has not accumulated alongside them.
In comparison to other claimants in the South China Sea, Brunei shifted from hedging to deference. It joined the 2016 four-point consensus that fractured ASEAN’s unified stance on the South China Sea, permitted Chinese naval fleets to dock at Muara Port, and declined to contest incursions into its exclusive economic zone (EEZ). As the co-disputant with the smallest territorial claim, Brunei has never posed a significant challenge to Beijing, and Beijing has not needed to apply the kind of sustained pressure it has directed at the Philippines or Vietnam.
Where its neighbours have built up diplomatic debt with Beijing through ASEAN forum challenges, bilateral protests, and freedom-of-navigation manoeuvres, Brunei has accrued none as a product of its size and a product of its choices. While other ASEAN states approaching Beijing for help with navigating Iranian policy or waters might carry accumulated friction that complicates the conversation, Brunei remains free of diplomatic debt.
This model also runs in the other Westward direction, too. Shell has historically held a 50% stake in Brunei Shell Petroleum, embedding the sultanate within the Western commercial networks whose war-risk premium withdrawals have effectively shut the Strait to most other traffic. The British Forces Brunei garrison, which remains as one of the last permanent British military presences in Southeast Asia, anchors the western end of the country in Belait District, while the Hengyi refinery holds the eastern tip at Pulau Muara Besar: opposite ends of the national landscape, held simultaneously, each reflecting coexistence rather than competition.
Against the standard of neutrality in the non-aligned tradition, Brunei’s foreign policy architecture is specifically designed so that no partner accumulates a grievance, and no relationship becomes a liability. Three decades of this have left Brunei uniquely unburdened at precisely the moment when buying from either a Gulf state or through U.S.-aligned channels carries complications.
As it stands, a partnership with Brunei offers an alternative, albeit small, supplier that carries no political alignment cost. An early indicator of this is reflected in Indonesia’s Ministry of Energy and Mineral Resources’ confirmation of its ongoing assessment of energy cooperation with Brunei for C3 and C4 gas supply. What followed over the next eight weeks was a series of diplomatic events that echoed far beyond this one early indicator alone.
Within seventy-two hours of the Hormuz closure, Brunei’s Second Minister of Foreign Affairs Dato Erywan Yusof was in Moscow, holding substantive talks with Foreign Minister Sergey Lavrov, who described Brunei as a “reliable long-standing partner,” noting a record bilateral trade of nearly USD 900 million in 2025, with both sides having agreed to advance a formal consultation plan between their foreign ministries. On April 1st, Brunei Fertiliser Industries joined Indonesia’s Pupuk Indonesia and Malaysia’s Petronas Chemicals Group in formally establishing the Southeast Asia Fertiliser Association (SEAFA), the first regional body of its kind, with its secretariat based in Bandar Seri Begawan. Anchoring SEAFA in Brunei extends its influence through multilateral design, securing legitimacy where hard power cannot, and pressing ASEAN to recognise food security in a crisis of chokepoint dependency.
Two weeks later, Australian Prime Minister Anthony Albanese visited Brunei in a working visit from April 14 to 16 that culminated in the signing of a Brunei-Australia Joint Statement on Energy and Food Security. Most recently, on April 27 to 28, Brunei co-chaired the 25th ASEAN-EU Ministerial Meeting in Bandar Seri Begawan, with freedom of navigation and the Strait of Hormuz formally on the agenda.
All these engagements form a pattern of different states and institutions from opposing geopolitical orientations that found Brunei to be a workable interlocutor within the same eight-week window of the Strait closing or during subsequent escalation of tensions following further blockades.
The zero-friction model has thus made Brunei one of the few nodes in the regional system that carries no diplomatic debt, with none of the approaches to or from Brunei requiring the sultanate to reposition itself relative to any others. Engaging Brunei sends little to no signal to Beijing, Washington, or Tehran. When alignment costs spike, as they have since February 28, a policy of non-confrontation produces outcomes that position smaller states like Brunei as a convenient interlocutor that lends legitimacy without demanding reciprocity.
…With Limits
Besides the fact that Brunei cannot substitute for the chokepoint, its bilateral ties simply do not translate into multilateral influence on behalf of neighbours. Friction- free ties do not extend China’s Hormuz passage arrangements to others, nor can it function as a forward base for Western strategic interests. As strong as any prior or subsequent statements might be, Brunei’s Islamic solidarity credentials, especially now with its newest alliance with Malaysia and Indonesia, depend on not being seen as instrumentalising them, and any attempt to convert diplomatic goodwill into specific commercial asks risks precisely that perception.
The structural pressures that Brunei was managing before February 28, including upstream production decline from maturing fields, a slow diversification program, and labour market pressures flagged in the ASEAN+3 Macroeconomic Research Office’s 2025 report, have not disappeared either. If anything, the global shock from the Hormuz closure will tighten the investment climate the sultanate needs to access.
Brunei’s case reflects a more precise account of what a sub-threshold state’s foreign policy can and cannot accomplish over time. For states operating below the threshold at which hedging, assertiveness, or hard alignment become credible options, the deliberate institutionalisation of non-confrontation into key bilateral relationships is a long-term architecture practised as a structural organising principle that accumulates optionality over time.
Some parts of this model are certainly not available for states such as the Philippines, Vietnam, or Indonesia due to their sizes, stakes, and choices that have made assertiveness rational and, in most cases, genuinely necessary. For other states below the threshold at which hard power and formal alignment become meaningful instruments, it is important to distinguish between managing one’s relationships with great powers and avoiding generating conditions that would require direct address altogether, recognising great power competition as a condition of the environment that requires states to rethink liabilities and recalibrate them accordingly for insulation from future alignment costs.
Gregory is an MSc candidate in Strategic Studies at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University. He works as a freelance writer specializing in international history, conflict, and counterterrorism. With experience in academia, investigative journalism, and voluntary uniformed service, he focuses on regional security developments across the Asia-Pacific, combining strategic analysis with practical field insights.
