Analyst Says Global Oil Price Surge Could Add Burden to State Budget
Jakarta – The surge in global oil prices stemming from escalating geopolitical tensions in the Middle East has drawn attention from many countries, including Indonesia. This spike in oil prices not only affects the global market but also exerts pressure on trade balances and the state budget (APBN).
This was stated by the Executive Director of the Palm Oil Agribusiness Strategic Policy Institute (PASPI), Tungkot Sipayung. “The rise in global crude oil prices will add to the burden on the APBN. For every US$10 per barrel increase in oil import prices, the additional burden on the APBN rises by around Rp20-30 trillion,” he said, as quoted from a press release on Thursday, 19 March 2026.
He explained that the energy distribution route in the Strait of Hormuz, which supplies about 20-30 percent of the world’s fossil fuel energy needs, including Indonesia’s, is vulnerable to conflicts in the Middle East region. This situation has the potential to significantly increase the financing burden for energy imports.
According to Tungkot, developing renewable energy is crucial to reducing reliance on fossil fuel imports. “Oil-importing countries like Indonesia are forced to pay more than double the previous import price for fossil fuels due to the conflict in the Middle East,” he said.
Tungkot added that the Indonesian government has sufficient experience in implementing biodiesel mandates. The ecosystem already built up to B40 serves as important capital for advancing to the B50 stage.
PASPI notes that Indonesia has the world’s highest biodiesel blending rate and is the third-largest biodiesel producer after the European Union and the United States.
He views this surge in global oil prices as an opportunity to accelerate the implementation of the 50 percent biodiesel policy or B50. As is known, B50 is a fuel blend consisting of 50 percent diesel and 50 percent palm oil-based biofuel.
“The B50 plan has actually been prepared by the government before the current Middle East conflict occurred,” he emphasised.
Since 2009, the government has implemented a biodiesel mandate policy, starting with B1. Policy development has continued up to B40 blending in 2025. The government also provides incentives for biodiesel development to cover the price difference between biodiesel and diesel, through the palm oil fund managed by the Plantation Fund Management Agency (BPDP).