Closure of the Hormuz Strait Could Pressure the Rupiah, Oil Prices Could Reach US$130

Geopolitical tensions in the Middle East are increasingly affecting the global energy supply chain. Josua Pardede, Chief Economist, assessed that the closure of the Hormuz Strait—the strategic route for much of the world’s oil shipments—could add pressure on the rupiah as world oil prices rise. Disruption to one of the world’s busiest energy shipping lanes could push global oil prices to as high as US$130 per barrel, or Rp2.1 million.

Pardede said that pressure on the rupiah would be likely to come from multiple directions if the conflict affecting the Hormuz Strait persists. In his simulations, a prolonged conflict could push oil prices to around US$75–100 per barrel. ‘Meanwhile, disruption of the Hormuz Strait could push it above US$100-130 per barrel,’ he told Media Indonesia on Friday (6 March).

He added that in such conditions the rupiah would typically be pressured from various directions at once. Higher energy prices would raise the need for foreign exchange for imports, while worsening market sentiment could trigger capital outflows. In this scenario, Bank Indonesia would tend to prioritise exchange rate stability by drawing on foreign exchange reserves.

Conversely, room for monetary policy easing is expected to be limited. This is especially the case when the average oil price reaches around US75perbarrelwiththeaveragerupiahataroundRp16, 750perUS in 2026. ‘Meanwhile, monetary policy could become tighter if oil prices reach an average US80perbarrelandtherupiahapproaches17, 000perUS,’ he said.

Furthermore, higher oil prices resulting from disruption to global energy routes could also press Indonesia’s foreign exchange reserves. When energy prices rise, import values increase, so the trade surplus narrows, the current account deficit could widen, and Bank Indonesia’s need to intervene to stabilise the rupiah would grow.

Pardede estimated that if the world oil price averages US$85 per barrel this year due to the prolonged conflict in the Middle East, Indonesia’s current account deficit could widen by around 0.48 percentage points.

This risk becomes more pressing given that January 2026’s trade surplus fell to US$0.95 billion, while import growth outpaced exports. ‘Thus, a fall in foreign exchange reserves could come from higher energy import bills and from the use of foreign currency to stabilise the exchange rate,’ he explained.

Nevertheless, he believes Indonesia’s external resilience remains comparatively strong. As of February 2026, foreign exchange reserves stood at about US$151.9 billion, considered adequate to withstand short‑term shocks, including those from geopolitics in the Middle East. The reserves cover around 6.1 months of imports or roughly 5.9 months of imports and government external debt payments. ‘This is well above the international adequacy standard of about three months of imports,’ he added. Accordingly, Indonesia is thought to retain a sufficient buffer to meet import needs, fulfil external obligations, and dampen initial shocks in financial markets.