Oil Price Breaches US$100 per Barrel, Warning: Indonesia's Budget Deficit Could Balloon
Jakarta — Global crude oil prices have surged sharply to breach the US$100 per barrel level, driven by supply disruptions from the Middle East stemming from the Iran conflict, which has kept the Strait of Hormuz closed.
On Monday trading (9 March 2026), West Texas Intermediate (WTI) crude oil jumped 18.98% or US$17.25 to US$108.15 per barrel. Meanwhile, global benchmark Brent crude rose 16.19% or US$15.01 to US$107.70 per barrel.
According to CNBC Indonesia research, the surge extends a rally in crude prices following last week’s approximately 35% jump in US crude, described as the largest weekly gain in futures trading history since 1983.
Technical analysts at Reuters estimate the price surge could even breach the US$120 to US$128 range, or approximately Rp2.16 million per barrel in the near term. Analyst Wang Tao’s report projects Brent crude contracts could surge to between US$120.22 and US$128.26 per barrel, following Brent’s breakthrough of key resistance areas at US$105.43 to US$108.48 and the formation of a second runaway gap on Monday’s trading.
This has sounded an alarm for the government. Finance Minister Purbaya Yudhi Sadewa revealed that if crude oil prices rocket to US$92 per barrel due to the Iran versus Israel-US conflict, the state budget deficit could swell above the safe threshold of 3.6% of GDP.
“We’ve calculated that if oil prices average US$92 per barrel for a full year, the deficit would reach 3.6% or more,” said Purbaya at his office in Jakarta on Friday (6 March 2026).
Data from the Ministry of Finance presented by Deputy Finance Minister Juda Agung indicates the safe oil price ceiling the country can sustain is US$80 to US$90 per barrel.
So what will the government do?
Purbaya indicated that if oil prices continue to soar, the government will implement austerity measures. “If that happens, we will take steps to prevent it. Where could we cut spending? For example, we could reduce the social assistance programme (MBG) budget,” he stated.
However, Purbaya assured that budget cuts to the MBG programme would not touch the main allocation for its core function: providing food assistance to schoolchildren, pregnant women, and the elderly.
Other budget items, such as procurement budgets, would become targets for austerity cuts if the deficit swells due to rising oil prices, rather than raising subsidised fuel prices.
“The MBG programme is good, but we want to prevent spending that doesn’t directly support food assistance. Other items—for instance, purchasing motorcycles where all implementation units receive motorcycles instead of their original allocation, they’re happy but I lose out. Or buying computers where all units get computers,” he explained.
Besides the MBG budget, which would be cut if the budget deficit balloons, Purbaya also said he would slash infrastructure project budgets that could be carried out over multiple years.
“For example, the Public Works Ministry might have expenditures that could be deferred to next year. They have various programmes—bridges, schools,” said Purbaya.
The MBG budget this year reaches Rp335 trillion with a target of 82.9 million beneficiaries. This represents an increase from 2025’s Rp71 trillion with a target of 17.9 million recipients.