Lessons from the Iran–US–Israel Conflict for the National Economy
On 28 February 2026, military escalations among Iran, the United States, and Israel intensified following a sequence of attacks and military responses in the Middle East. On 2 March 2026, Iran declared threats against ships passing through the Strait of Hormuz, triggering global concerns about the stability of energy supply (Reuters, 2026a). A day later, global oil prices were reported to have risen sharply due to supply-disruption risks along that route (Reuters, 2026b).
The Strait of Hormuz is a strategic passage linking the Persian Gulf to the Indian Ocean and is one of the world’s most important energy chokepoints. About one-fifth of global oil trade passes through this route (U.S. Energy Information Administration [EIA], 2024). In other words, stability in the region is crucial to the smooth distribution of international energy. When military escalations occur or threats to shipping emerge, global markets respond promptly with higher prices and increased energy volatility.
That situation subsequently rippled to various countries dependent on energy trade and imports, including Indonesia. Although not directly involved in the conflict, the escalation around the Strait of Hormuz exerts an indirect yet significant pressure on Indonesia’s economy. The impact is transmitted through several main channels: the energy channel via higher import costs, the fiscal channel through subsidies and compensation burdens, the monetary channel through exchange-rate pressures and financial-market volatility, and the trade channel through higher logistics costs and disruptions to global supply chains.
Firstly, rises in global oil prices have the potential to raise Indonesia’s energy import costs. As a country that still imports crude oil and fuel, the surge in global prices resulting from distribution-disruption risks in Hormuz would increase the national energy import bill (Reuters, 2026b). If domestic prices are not adjusted promptly, the burden of energy subsidies and compensation within the State Budget (APBN) could rise (IISD, 2024).
Secondly, pressure on energy prices can push domestic inflation higher. Energy is a major component of transport and production costs. Fuel-price increases typically ripple into food, logistics, and consumer goods prices, thereby eroding households’ purchasing power (ING Think, 2026).
Thirdly, global geopolitical uncertainty tends to trigger capital outflows from developing countries toward safe-haven assets such as the U.S. dollar. This can weaken the rupiah and heighten volatility in domestic financial markets (Reuters, 2026b). A weaker exchange rate, in turn, can amplify import costs and inflationary pressures.
Fourthly, security risks in the Hormuz region can raise insurance and shipping costs for international trade. These supply-chain disruptions affect not only energy but also other imported goods traversing global trade routes. Higher logistics costs can slow trade activity and impact economic growth (Reuters, 2026a).
Overall, the conflict in the Middle East demonstrates that Indonesia’s economic stability is highly influenced by the dynamics of global energy. Although not directly involved in the conflict, Indonesia continues to face impacts through energy prices, fiscal pressures, inflation, exchange rates, and international trade performance.
Golden Opportunities to Become a Self-Reliant Nation
Global tensions such as conflicts around the Strait of Hormuz show that dependency on energy and the global system makes the national economy easily unsettled. Therefore, long-term solutions should not just dampen impacts but build comprehensive economic self-reliance. Self-reliance here does not mean shutting out international cooperation, but strengthening domestic foundations so Indonesia stands firmer and is not easily buffeted by external crises.
Energy independence should be the starting point. Indonesia has great potential in geothermal, solar, biomass, and hydropower. By accelerating community-based renewable energy development—such as rooftop solar, village micro-hydropower, and bioenergy from agricultural waste—dependence on oil imports can be reduced gradually. Cooperative ownership models or productive partnerships can also enable communities to be part of the energy value chain, not merely consumers. Downstream processing of natural resources should also be strengthened so Indonesia does not only export raw materials but processes them into value-added products domestically.
Beyond energy, food independence is also crucial. Strengthening cooperative-based farming, fair partnerships between farmers and markets, and regional food reserves management can maintain price and supply stability. Transparent and equitable distribution will ensure producer welfare while protecting consumers. With a more integrated production and distribution system, global shocks will not easily disrupt national food availability.
In the financial sector, strengthening real-asset-based financing and productive partnerships should be expanded. Financing systems that emphasise direct links to production activities and proportionate risk-sharing tend to be more stable than systems reliant on debt with fixed interest rates and market speculation. Real-asset project financing instruments, including green financing for energy and infrastructure, can form the backbone of a more crisis-resilient economic transformation. This approach aligns with economic principles that prioritise fairness, transparency, and balance between profit and responsibility.
Industrial and technological self-reliance must also be strengthened through downstream processing, domestic research, and development of national supply chains. Collaboration between universities, business players, and government …