Array of Economic Impacts from the US Blockade in the Strait of Hormuz

The United States has enacted a military blockade of the Strait of Hormuz amid rising tensions with Iran since Monday, 13 April 2025. Economist and lecturer at the University of National Development Veteran Jakarta, Achmad Nur Hidayat, predicts that this will impact the global and domestic economies.

The economic impacts stem from increased production costs and logistical supply disruptions resulting from the US blockade in this vital global energy trade route. “For businesses in Indonesia, this transmission is not just about petrol prices at filling stations, but a surge in industrial raw material costs, most of which still need to be imported via sea transport,” Achmad stated in a written comment on Wednesday, 15 April 2026.

Consequently, Achmad explained, corporate profit margins will face greater pressure, ultimately forcing companies to implement efficiencies. In the worst-case scenario, this could lead to workforce reductions.

The geopolitical dynamics also affect the rupiah’s exchange rate, which has continued to weaken over the past week. According to Trading Economics data, on Monday morning, 15 April 2026, the rupiah climbed above 17,110 per US dollar. The rupiah had held steady at 17,000 per US dollar from early April until now.

According to Achmad, the rupiah’s depreciation reflects the phenomenon of capital flight towards safety, often termed flight to safe-haven assets, one of which is the US dollar. “This weakening is not merely numbers on traders’ screens, but a real burden on people’s purchasing power,” he said.

He assessed that external factors, or tensions in the Middle East, are the dominant cause of the rupiah’s weakening, including the US blockade in the Strait of Hormuz. “However, we must not ignore domestic factors such as seasonal demand for foreign currency for debt and dividend payments that are muddying the waters.”