Celios Comments on the Threat of Bab-el-Mandeb Closure
Executive Director of the Center of Economics and Law Studies (Celios), Bhima Yudhistira, assesses that the threat of closing the Bab-el-Mandeb Strait carries a greater risk to global trade than if the Strait of Hormuz were closed.
According to him, 12% of world trade passes through this route because it is the fastest path from Asia to Europe and Africa. “12% of world trade passes through the Bab-el-Mandeb Strait because it is the fastest route,” he stated in a written release on Monday, 30 March 2026.
After the Strait of Hormuz, Iran is said to be planning to close another vital trade route, namely the Bab-el-Mandeb Strait. This strait separates the Asian continent from Africa and connects the Red Sea with the Indian Ocean.
Bhima recalls that during the 2023–2024 period, disruptions in the Bab-el-Mandeb Strait once added up to 15 days to shipping times. This situation made it difficult for cargo ships to obtain insurance protection and caused a surge in logistics costs for import and export activities.
He views this situation as something that needs to be anticipated because as of January 2026, Indonesia’s exports to Europe accounted for 13.4% of total exports.
Bhima also projects that global oil prices could breach US$120 per barrel if the strait is truly closed. The impact would be quicker pressure on imported inflation through food and energy channels, felt by the public.
In addition, fertiliser raw materials that also pass through this route could be disrupted, ultimately pressuring agricultural producers. Bhima assesses that this condition could also pressure the rupiah exchange rate due to weakening export performance at a time when import costs are rising.
Bhima suggests that the government immediately take mitigation steps. First, lobbying the Yemeni and Iranian governments so that cargo ships carrying Indonesian goods are not hindered. Second, accelerating the reallocation of the budget for energy subsidies and fertiliser subsidies.
He estimates that additional government spending could reach Rp 515 trillion, assuming that every US$1 increase in oil prices per barrel above the state revenue and expenditure budget (APBN) assumptions adds a burden of Rp 10.3 trillion in spending.
Third, the government is deemed necessary to increase subsidies for public transportation to curb fuel consumption.
Fourth, accelerating the energy transition, especially in the electricity sector through the installation of solar panels, micro-hydro, and wind power. In rural areas that still rely on diesel for generators, Bhima encourages switching to alternative energy sources.