Iran-Israel Conflict Heats Up, Energy and Gold Shares Poised to Surge
JAKARTA – The escalation of the Iran-Israel conflict has the potential to rock global financial markets and drag the Indonesian Composite Index (IHSG) into negative territory. Rising energy prices, risk-off sentiment, and rupiah weakening could trigger sharp corrections in the domestic stock market.
Azharys Hardian, Investment Specialist at PT Korea Investment and Securities Indonesia (KISI), stated that the Middle East conflict will exert pressure on the basic industry sector and sectors dependent on imported raw materials. This condition is expected to depress IHSG performance.
According to him, China, one of Iran’s major oil consumers, sources approximately 13 per cent of its total oil imports from the country. Should supply be disrupted due to the conflict, energy costs in China could spike significantly.
“This escalation is predicted to deliver significant pressure on the basic industry sector and sectors with high dependence on imported raw materials. Why? China currently relies on approximately 13 per cent of its total maritime oil imports from Iran,” said Azharys when contacted by Kompas.com on Sunday (1 March 2026).
Given that China is Indonesia’s primary trading partner, an economic slowdown behind the Bamboo Curtain due to elevated energy costs will directly impact reduced demand for Indonesian exports, particularly commodities and raw material-based industrial products.
“Disruption to these supplies will trigger surging energy costs and production costs in China. As Indonesia’s primary trading partner, an economic slowdown in China due to high energy costs will immediately strike demand for our exports,” he explained.
“Emitters importing raw materials denominated in US dollars will face a double blow: rising raw material prices globally and potential rupiah weakness due to risk-off sentiment,” Azharys stated.
However, amid these pressures, certain sectors stand to benefit. He assessed the oil and gas sector as having the potential to gain positive catalysts from the conflict escalation.
The Strait of Hormuz, which accounts for nearly 30 per cent of global oil trade, is a critical chokepoint. Should disruption or closure risks occur, global crude oil prices would almost certainly spike due to supply concerns.
“Emitters such as MEDC, ELSA, and ENRG are predicted to experience share price appreciation along with potential revenue increases from rising average selling prices (ASP) of global oil,” he said.
Beyond the oil and gas sector, energy shipping emitters such as PT Buana Lintas Lautan Tbk (BULL), PT GTS International Tbk (GTSI), and Soechi Lines Tbk (SOCI) are in a strategic position to capitalise on momentum from rising international shipping rates.
Thus, whilst the IHSG faces risk of a plunge due to global pressures, sector rotation is quite likely. Basic industry and raw material importers face potential headwinds, whilst the energy sector could serve as a prop for the index.