Geopolitical tensions in the Middle East have escalated following\njoint military strikes by the United States and Israel against Iranian\nfacilities on Saturday, 28 February 2026. This situation has raised\nsignificant concerns regarding impacts on global oil prices and the\nIndonesian economy.<\/p>\n
Yayan Satyakti, an energy economics observer from Padjadjaran\nUniversity (Unpad), assessed that the conflict has triggered market\nconcerns regarding potential disruptions to global crude supply,\nparticularly due to threats of closure of the Strait of Hormuz, a\nstrategically critical oil export route.<\/p>\n
Global crude oil prices at the close of trading on Friday, 27\nFebruary 2026 showed West Texas Intermediate (WTI) at US$67.02 per\nbarrel and Brent at US$72.80 per barrel.<\/p>\n
According to Yayan\u2019s analysis, escalation of the conflict could\ntrigger significant oil price increases. Moreover, potential retaliatory\nmeasures such as restricting access or attacking oil infrastructure\ncould worsen the situation.<\/p>\n
Using Game Theory modelling, Yayan projected that oil prices could\nsurge more than 100% from baseline levels if military escalation between\nIsrael, the US, and Iran continues. This suggests that global oil prices\ncould reach approximately US$140 per barrel by early March 2026.<\/p>\n
\u201cIn this scenario, the likelihood becomes increasingly high above\n100% from baseline, meaning oil prices around US$140, which would occur\naround 7 March 2026,\u201d Yayan told Bisnis on Sunday, 1 March 2026.<\/p>\n
In a moderate scenario, a 25% increase is estimated to push prices\ntowards US$87.50 per barrel. Even in the short term, a range of US$70\u201380\nis considered highly plausible.<\/p>\n
Yayan explained that rising global oil prices would impact Indonesia,\nparticularly because the baseline crude oil price assumption in the 2026\nstate budget is US$70 per barrel.<\/p>\n
Rising global oil prices could potentially force the government to\nrevise fiscal assumptions as they could trigger increases in domestic\nfuel prices.<\/p>\n
\u201cThere is a likelihood that fuel prices will rise by around 5% to 10%\nin the coming weeks if escalation continues,\u201d said Yayan.<\/p>\n
Additionally, oil import costs are also likely to increase, which\ncould add pressure to the state budget. However, conversely, higher oil\nprices could also increase state non-tax revenue (PNBP) from the oil\nsector.<\/p>\n
The conflict could also cause the rupiah to weaken against the US\ndollar due to increased demand for dollars to purchase imported oil.<\/p>\n
In the medium term, escalation in oil prices is estimated to narrow\nthe government\u2019s fiscal space due to increased energy subsidy burdens\nand erode foreign reserves in US dollars due to payments for\nincreasingly expensive oil imports.<\/p>\n
\u201cDollar reserves will diminish as oil becomes more expensive,\nresulting in dollar depreciation,\u201d said Yayan.<\/p>\n
Oil and gas practitioner Hadi Ismoyo agreed that the current military\nescalation is more serious than before, particularly because the Strait\nof Hormuz is traversed by 20% of global oil exports and 30% of LNG\nexports.<\/p>\n
\u201cMy prediction is that oil prices will rise significantly due to\nsupply uncertainty from Gulf nations,\u201d said Yayan.<\/p>\n
Hadi Ismoyo, former secretary-general of the Indonesian Association\nof Petroleum Engineers (IATMI), also argued that domestic fuel prices\nhave the potential to rise because Indonesia still imports approximately\n1 million barrels of crude oil daily (bpd).<\/p>\n
\u201cHowever, the mechanism for fuel price increases requires government\napproval. So even if imported crude rises, Pertamina cannot directly\nraise fuel prices without government approval,\u201d said Hadi.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/middle-east-conflict-sparks-concerns-over-global-oil-price-rise-1772387592", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }