Iran-US Conflict Threatens Rise in Subsidised Fuel Prices? Here's What Airlangga Says
Jakarta — Crude oil prices stand to increase following global crude oil prices surpassing US$100 per barrel amid escalating conflict in the Middle East.
According to Refinitiv data as of 08:55 WIB on Monday 16 March 2026, Brent crude oil was recorded at US$103.8 per barrel, whilst West Texas Intermediate (WTI) crude stood at US$98.45 per barrel. This has prompted concerns about potential increases in domestic fuel prices.
However, Coordinating Minister for Economic Affairs Airlangga Hartarto stated that there are currently no plans to raise fuel prices, particularly subsidised fuel. According to him, it remains too early to estimate how long the conflict will persist.
“We haven’t seen the figures yet, which is why there’s nothing concrete. The figures need to emerge first. Since they haven’t emerged yet, there’s nothing. Who knows, perhaps the conflict ends tomorrow,” he said.
Nevertheless, during a cabinet meeting, Airlangga outlined several scenarios prepared regarding the duration of the conflict, based on assumptions that Indonesia’s crude oil price would remain in the range of US$90–US$100 per barrel.
Airlangga detailed three scenarios should changes occur in assumptions regarding crude oil prices and exchange rates:
Indonesia crude oil price (ICP) of US$86 per barrel, exchange rate of Rp17,000 per US dollar, whilst the state budget assumes Rp16,500 per US dollar, with growth maintained at 5.3%, government securities at 6.8%, resulting in an estimated budget deficit of 3.18%.
The second moderate scenario with ICP of US$97 per barrel, exchange rate of Rp17,300, growth of 5.2%, government securities at 7.2%, resulting in a deficit of 3.53%.
The worst-case pessimistic scenario, with ICP of US$115 per barrel, exchange rate of Rp17,500, growth of 5.2%, government securities at 7.2%, resulting in a deficit of 4.06%.
As recalled, the 2022 Russia-Ukraine conflict similarly caused ICP to exceed US$100 per barrel in the early to mid-2022 period, leading to a rise in subsidised fuel prices, particularly Pertalite petrol, in September.
Nevertheless, Airlangga reiterated that the government has reached no further decision regarding the fate of subsidised fuel prices going forward.
“We’ll wait and see how extensive the impact becomes. There’s no hard rule for this,” Airlangga said.
For context, the sharp surge in global crude oil prices beginning early March has placed crude at its highest levels in recent years, driven by escalating Middle Eastern conflict threatening global energy distribution routes.
Tensions between the United States and Iran, along with disruptions to the vital Strait of Hormuz shipping route for global oil supplies, have returned the market to an energy crisis mode.