Airlangga confirms there are no plans to raise subsidised fuel prices yet

Jakarta (ANTARA) - Coordinating Minister for Economic Affairs Airlangga Hartarto has assured that the government has no plans to raise the prices of subsidised fuel (BBM) amid rising world oil prices driven by geopolitical tensions in the Middle East. He said the government is still monitoring developments in the region and their impact on global crude oil prices before taking further policy steps. “Not yet (to increase subsidised BBM). Our macro assumptions in the APBN yesterday were at USD 70 per barrel (ICP). So we will just wait,” he said in Jakarta on Thursday. Airlangga explained that the government is currently preparing a number of scenarios to anticipate potential long-lasting impacts of the conflict. “Until when? The war could last three months, six months, or longer. So we each are preparing scenarios,” he added. A energy expert from Padjadjaran University, Yayan Satyakti, predicts global oil prices could rise to as much as USD 100 per barrel from around USD 72 per barrel if the Hormuz Strait were closed. The Hormuz Strait is a strategic sea lane linking the Persian Gulf with the Gulf of Oman, located between Oman and Iran, and is a major route for global energy trade. Through this strait flows about one fifth of the world’s total oil exports, including much of the oil from Gulf countries such as Saudi Arabia, the United Arab Emirates, Kuwait, and Iraq before it is sent to international markets. In this context, Yayan considers the Hormuz Strait a crucial point in the conflict between Iran, the United States and Israel. “If Iran closes the Hormuz Strait, oil prices will rise by 50 per cent,” he said. He added that a spike in fuel prices could impact Indonesia, which still imports part of its oil needs from the Middle East. Even without the closure of Hormuz, the ongoing conflict could push oil prices up by around 10-25 per cent. Given the potential for oil prices to exceed macro assumptions in the 2026 State Budget (APBN) of USD 70 per barrel, Yayan reminded the government to anticipate possible budget overruns. It was reported on Saturday (28/2) that Israel and the US launched an attack on Iran. The attack is the second carried out by the Trump administration since the first attack in June 2025. Trump stated that American forces launched a major military operation in Iran to protect its people by eliminating what he called threats arising from alleged nuclear weapons development by Iran. The US and Iran had previously held three rounds of indirect talks on Iran’s nuclear program mediated by Oman.