Oil Prices Rise, Rupiah Weakens; Commission XII Warns Energy Subsidies Will Balloon if Prolonged
Jakarta — Rising global oil prices and prolonged rupiah weakness are certain to swell the fiscal deficit of Indonesia’s State Budget (APBN).
Agung Suparwoto, Deputy Chair of Commission XII of the House of Representatives, stated that global oil prices have now surpassed $110 per barrel American whilst the rupiah has weakened to approximately 17,000 per US dollar.
“If this persists for a considerable time, energy subsidies will certainly surge, and our fiscal deficit (APBN) will balloon,” said Suparwoto when contacted by Kompas.com on Monday (9 March 2026).
He noted that in the 2026 APBN, the government and parliament have set oil lifting at 610,000 barrels per day with an assumed oil price of $70 per barrel. This determination was made with an exchange rate of Rp16,500 per US dollar.
Based on this specification, the government and parliament allocated total energy subsidies covering oil, gas, and electricity from the government budget at Rp210 trillion.
“Now both oil prices and the dollar exchange rate have soared significantly, so energy subsidies will exceed Rp420 trillion,” said Suparwoto.
The Nasdem party politician stated that the swelling subsidy value must still be supplemented with compensation of approximately Rp120 trillion.
“This brings subsidies and compensation to Rp560 trillion,” he said.
According to him, in such circumstances, the government could rely on rising prices of several mining and plantation commodities that form Indonesia’s mainstays. Prices of tin, copper, nickel, coal, and crude palm oil (CPO) have risen in line with increases in oil and gas.
“This will certainly increase our foreign exchange reserves, which can compensate for rising energy prices,” Suparwoto noted.
Global oil prices have surpassed $110 per barrel. According to Trading Economics data, WTI crude oil prices reached $114.99 per barrel at 11:43 am local time. Meanwhile, at 8:15 am local time, Brent crude oil prices had risen to $111.04 per barrel.
This increase in energy feedstocks has been triggered by disruptions to oil distribution and production resulting from the closure of the Strait of Hormuz.
Finance Minister Purbaya Yudhi Sadewa stated that if global oil prices rise to $92 per barrel, the APBN deficit would breach the safe threshold determined by law.
“If oil prices rise to $92 per barrel, what would be the impact on the deficit? If we take no action, our deficit would rise to 3.6 to 3.7 per cent of GDP,” said Purbaya during a breaking of fast with journalists at the Finance Ministry on Friday (6 March 2026).