Government Anticipates Oil Supply Disruption

Coordinating Minister for Economic Affairs Airlangga Hartarto stated that escalating tensions resulting from the conflict between the United States and Israel against Iran have disrupted global oil supply chains. The government has prepared mitigation measures, specifically through supply diversification.

Supply disruptions have occurred due to the closure of the Strait of Hormuz, a vital route for oil and gas (energy resources) trade. “First of all, regarding Iran, oil supply will certainly be affected. Because the Strait of Hormuz is disrupted, and the Red Sea situation as well. So we will see how long this conflict continues,” Airlangga stated at his office on Monday, 2 March 2025.

The government’s anticipatory measures to address the impact of supply disruptions involve supply diversification. Airlangga stated that the Indonesian government has already signed memoranda of understanding to obtain supplies from sources other than the Middle East.

“For example, Pertamina recently concluded Memoranda of Understanding (MoU) with several American companies, including Chevron, Exxon, and others,” he said.

In the trade agreement between the United States and Indonesia, Indonesia has committed to importing energy resources from the United States valued at US$15 billion. The government continues to monitor supplies from other countries as alternative import sources.

Beyond oil supply, Airlangga explained that the Middle East conflict impacts logistics transport and tourism. Domestic fuel prices also risk rising. “Of course prices will rise, as happened during the Ukraine war. But this time supplies from America will also increase and OPEC (Organisation of the Petroleum Exporting Countries) will also expand its capacity,” he said.

Based on historical data, crude oil reached US$100 per barrel in 2022 during Russia’s invasion of Ukraine. As of Monday afternoon, 2 March 2025, Brent crude oil was trading at US$79 per barrel, up from Saturday’s close of US$72.8 per barrel. According to Trading Economics data, WTI crude oil futures were at US$72.3 per barrel, surging from the previous level of US$67.2 per barrel.