Parliament Members Urge Government Not to Underestimate Geopolitical Dynamics in the Middle East
Geopolitical tensions in the Middle East region are viewed as having strategic implications for Indonesia. In response, Jalal Abdul Nasir, a member of Commission XII of the Indonesian House of Representatives, explained that political dynamics involving Gulf region countries are considered to have the potential to affect national energy security, state fiscal stability, and public purchasing power.
“The geopolitical situation in the Middle East should not be viewed as an issue far from Indonesia’s interests. Its impact can be directly felt in the national energy and economic sectors,” stated Jalal in a written statement on Saturday, 14 March.
As is well known, Indonesia’s dependence on energy imports remains quite high. This is reflected in the national oil requirement, which stands at between 1.5 and 1.6 million barrels per day, whilst domestic production remains at approximately 600,000 barrels per day.
“This means more than 60 per cent of national oil requirements are still met through imports, whether in the form of crude oil or finished petroleum products. This condition makes Indonesia quite sensitive to fluctuations in global energy prices,” explained Jalal.
Disruptions to global energy distribution are also understood to occur when international oil trade routes experience tensions. One of the most strategically important routes that frequently attracts global attention is the Strait of Hormuz.
“Approximately 20 to 30 per cent of world oil trade passes through the Strait of Hormuz. If distribution disruptions occur in that region, global oil prices would almost certainly be driven upwards,” he said.
He also reminded that the impact of rising global oil prices can affect Indonesia’s fiscal condition. In the structure of Indonesia’s State Budget (APBN), the energy sector remains a component quite sensitive to changes in oil prices.
“Every increase of approximately USD 10 per barrel has the potential to increase the burden of energy subsidies and compensation by trillions of rupiah. This pattern has occurred several times when geopolitical escalation has intensified,” said Jalal.
Beyond affecting the state budget, global dynamics can also influence financial market stability. Changes in global sentiment often drive capital outflows from developing countries.
“In situations like this, policy coordination between the government and Bank Indonesia becomes extremely important to keep inflation within target,” he added.
Rising energy prices are also understood to have ripple effects on other sectors such as logistics costs, food prices, transport tariffs, and industrial production costs, which could increase if energy volatility is not properly anticipated.
“If energy pressure is not anticipated thoroughly, public purchasing power could be eroded. Therefore, anticipatory measures must be prepared from the beginning,” Jalal stressed.
This momentum of global dynamics is also considered an opportunity to strengthen the foundation of national energy. Various strategic steps are viewed as important to reduce dependence on energy imports.
“Indonesia needs to accelerate the increase in national oil and gas lifting, strengthen strategic energy reserves, expand the development of new renewable energy, and ensure energy subsidies increasingly target those who need them most,” stated Jalal.