Differences in Responses from SBY to Prabowo in Facing Repeated Surges in Oil Prices

Jakarta, CNBC Indonesia - Global oil prices have recently surged sharply due to escalating geopolitical tensions in the Middle East, particularly following the outbreak of war between the United States-Israel and Iran. This conflict has had a major impact on global energy routes because Iran temporarily blockaded shipping access, including oil tankers, in the Strait of Hormuz.

The Strait of Hormuz is a vital route for world energy trade. Around one-fifth of global oil supplies pass through that region. Therefore, any disruption in this route almost always directly drives a surge in world oil prices.

According to Refinitiv data, Brent crude prices even reached US$119 per barrel intraday on 31 March 2026, the highest level since the major energy market turmoil during the Russia-Ukraine war period in 2022.

This surge reminds Indonesia of several previous periods when world oil prices also rose sharply and exceeded the macroeconomic assumptions in the state budget.

In such conditions, the government is usually forced to take adjustment measures, from revising oil price assumptions, changing energy subsidies, to adjusting domestic fuel prices.

Non-Subsidised Fuel Prices Increase

PT Pertamina (Persero) has officially raised the prices of several non-subsidised Fuels (BBM) sold at petrol stations. This price adjustment has been effective since 18 April 2026, as stated on Pertamina’s official website.

The price increase affects several non-subsidised BBM products, with significant surges, particularly for diesel and high-octane petrol types.

For example, in DKI Jakarta, Pertamax Turbo (RON 98) is set at Rp19,400 per litre, up from the previous Rp13,100 per litre. Meanwhile, Dexlite has risen to Rp23,600 per litre from the previous Rp14,200 per litre.

Pertamina Dex has increased to Rp23,900 per litre from the previous Rp14,500 per litre.

Oil Price Surges in the Last 20 Years

In the last 20 years, oil prices have surged multiple times due to various factors, from wars to crises.

2004 - 2005

The early era of President Susilo Bambang Yudhoyono faced a surge in oil prices.

The surge in world oil prices actually began to be felt from 2004. Based on Refinitiv data, Brent crude prices that year rose by around 33% compared to the previous year.

This increase immediately put pressure on Indonesia’s fiscal position because the oil price assumption in the 2004 state budget was still far below market realisation.

In the 2004 state budget, the government set the assumption for Indonesia Crude Price (ICP) at US$22 per barrel. However, midway through, the government was forced to revise that assumption through the amended state budget to US$36 per barrel.

Even after being raised, the 2004 ICP realisation was still higher, reaching US$37.6 per barrel.

The pressure continued into 2005. From Refinitiv data, Brent prices rose again by around 42% annually. Meanwhile, in the 2005 state budget, the government initially set the oil price assumption at only US$24 per barrel. Along with the world oil price surge, the government had to make adjustments through two amended state budgets.

In the first amendment, the oil price assumption was raised to US$45 per barrel. Not long after, the assumption was revised again to US$54 per barrel. In the end, the ICP realisation throughout 2005 was recorded at US$53.4 per barrel.

These figures show the immense pressure faced by the state budget in a short time due to the global energy price surge.

In such conditions, the government did not only rely on revising state budget assumptions. The ongoing oil price increase also forced the government to adjust subsidised fuel prices domestically. At that time, the government considered the energy subsidy burden too heavy to be fully borne by the state budget.

However, the government also understood that raising fuel prices would directly hit people’s purchasing power, especially low-income groups. Therefore, the government prepared a direct compensation programme through Direct Cash Assistance (BLT).

BLT was given as a buffer so that poor communities would still have purchasing power when the prices of basic necessities also rose after fuel prices were increased.

In a fiscal study by the Ministry of Finance, it was stated that in the 2005 fuel subsidy reduction, the compensation given to target communities was Rp100,000 per month.

2007 - 2009

The world oil price surge began to be felt more intensely in 2007. Brent crude prices rose by around 60.2% in one year, from US$58.49 per barrel on 2 January 2007 to US$93.68 per barrel on 31 December 2007.

Entering 2008, the pressure became far heavier.

In the 2008 state budget, the government initially set the oil price assumption at US$60 per barrel. However, the continuing oil price surge quickly left that assumption behind.

The government then revised the oil price assumption in the amended state budget to US$95 per barrel. Even after being sharply raised, the 2008 oil price realisation was still higher, at around US$97 per barrel.

In this situation, pressure on the state budget also surged because energy subsidies ballooned.

The government actually emphasised that it did not want to rush into raising all energy prices, especially kerosene, because the impact would be very heavy on small communities.

However, fiscal space was becoming narrower. When world crude oil prices were around US$120 per barrel, the energy subsidy burden was said to reach around Rp260 trillion. This condition then pushed the government to finally take steps to raise fuel prices in 2008.

The government was no longer just facing oil prices far exceeding state budget assumptions, but also facing the risk of subsidy ballooning that could increasingly burden state finances. In such conditions,