An economist from Andalas University, Syafruddin Karimi, views the\nplan for a two-week ceasefire between the United States (US) and Iran as\nproviding relief to global markets, as reflected in the fall in oil\nprices. However, this pause in the conflict is deemed insufficient to\nrestore the global supply chain that was previously shaken, especially\nalong the vital Strait of Hormuz route.<\/p>\n
He explains that the physical recovery of goods flow does not occur\nautomatically. Around 130 million barrels of oil, 46 million barrels of\nrefined fuels from crude oil, and 1.3 million tonnes of liquefied\nnatural gas (LNG) remain held up on ships waiting for safe passage.\nShipping companies, vessel operators, and insurers will also continue to\ncalculate risks carefully before sending fleets back to the area.<\/p>\n
The disruption to oil exports through Hormuz, which reached about 13\nmillion barrels per day in March, has also forced producers to cut\noutput significantly. Meanwhile, restarting oil fields, terminals, and\nrefineries takes weeks or even months.<\/p>\n
\u201cSo, two weeks is enough to calm market panic, but not enough to\nreturn the global supply chain to normal,\u201d Syafruddin told Media\nIndonesia on Wednesday (8\/4).<\/p>\n
He states that energy disruptions can quickly turn into global\ninflation, even before supply shortages are truly felt in the real\nsector. Markets usually first channel energy shocks into oil contract\nprices, shipping costs, insurance fees, and inflation expectations.<\/p>\n
When Hormuz is closed and the conflict escalates, markets immediately\ncalculate the risks of a surge in global energy prices and potential\nglobal slowdown. This, Syafruddin says, is reasonable because the route\nhandles about one-fifth of global oil shipments. Once disrupted,\nenergy-importing countries immediately face threats of rising production\ncosts, transportation, logistics, and even food prices. Asia is a\nparticularly vulnerable region because it imports about 60% of its oil\nand 80% of its gas from the Middle East.<\/p>\n
\u201cThat means the transmission from energy disruption to inflation does\nnot wait for months,\u201d Syafruddin says.<\/p>\n
Price expectations can move within days, then passed on to import\nprices, freight tariffs, and distribution costs in a short time. The\nceasefire does reduce short-term risks, but the wounds in the energy\nmarket mean the threat of global inflation has not fully subsided.<\/p>\n
The impact on domestic fuel oil (BBM) prices and subsidy burdens is\nalso seen as significant, especially if the ceasefire does not hold or\nsupply recovery is slow. As a net energy importer, Indonesia remains\nvulnerable to global oil price volatility that can quickly increase\nimport costs and pressure domestic stability.<\/p>\n
Syafruddin notes that the two-week ceasefire did ease pressure for a\ntime. Brent oil prices fell sharply, while the rupiah strengthened to\naround Rp17,010 to Rp16,995 per US dollar. Nevertheless, the global oil\nmarket is estimated to remain tighter by about 3\u20135 million barrels per\nday compared to pre-conflict expectations in the coming years.<\/p>\n
\u201cTherefore, the risks to domestic BBM and subsidies are still\npresent, especially if the conflict reignites or logistics recovery is\ndisrupted,\u201d he says.<\/p>\n
On the other hand, the rupiah\u2019s strengthening is expected to be\nlimited and prone to reversal. This movement also occurred regionally,\nwith other ASEAN currencies such as the Malaysian ringgit, Philippine\npeso, Singapore dollar, and Thai baht also strengthening.<\/p>\n
Meanwhile, the US dollar tends to weaken globally, and gold prices\nremain strong, reflecting the market\u2019s continued search for safe-haven\nassets amid uncertainty.<\/p>\n
As long as the ceasefire holds, the Strait of Hormuz remains open,\nand the US dollar does not strengthen sharply again, the rupiah has a\nchance to stay below Rp17,000 per US dollar.<\/p>\n
\u201cHowever, market players still view this situation as fragile, so the\nrecovery is more temporary in nature,\u201d he adds.<\/p>\n
Contacted separately, senior economist and founder of the Institute\nfor Development of Economics and Finance (Indef), Didin S. Damanhuri,\nviews the permission for two Pertamina tankers to cross the Strait of\nHormuz as positive news for Indonesia\u2019s oil supply. This condition is\nseen as able to suppress potential shortages and energy price surges\ndomestically, while opening opportunities for the government to improve\nfiscal conditions. He emphasises that the budget deficit needs to be\nkept below 3%.<\/p>\n
Nevertheless, he reminds that Indonesia\u2019s fiscal condition still\nfaces pressure, given that the deficit target has been set at 2.9% even\nwithout geopolitical conflicts. To maintain fiscal sustainability, Didin\nbelieves state spending needs to be more efficient, particularly in\nprogrammes like the Free Nutritious Meals (MBG) and other policies such\nas the Red White Village Cooperatives.<\/p>\n
\u201cThis efficiency step is important to improve fiscal health and avoid\nadditional foreign debt that could burden the state\u2019s finances,\u201d he\nasserts.<\/p>\n
Didin opines that the MBG programme budget is still too large and not\nfully on target because it does not flow much to the MSME sector.<\/p>\n
\u201cTherefore, he suggests reducing the MBG budget by up to 50% and\nfocusing it on addressing stunting, which is still around 19\u201320%, so\nthat the benefits are more optimal,\u201d he proposes.<\/p>\n
Didin adds that if the plan to add new debt in 2026 amounting to\nRp826 trillion can be curbed, then the debt principal and interest\npayment burden estimated at Rp1,650 trillion can also be reduced. These\nsavings are seen as able to be redirected to drive higher economic\ngrowth while reducing inequality, particularly through strengthening\npeople\u2019s purchasing power, social assistance programmes, and capital\nsupport for MSMEs.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/two-week-us-iran-ceasefire-not-enough-global-supply-chain-still-disrupted-1775641942", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }