Purbaya Outlines Three Economic Risks for Indonesia If Hormuz Strait Disrupted
Jakarta — Finance Minister Purbaya Yudhi Sadewa has warned of the potential impact on the global economy should shipping activity in the Strait of Hormuz be disrupted due to escalating geopolitical tensions in the Middle East.
The conflict involving the United States, Israel, and Iran poses a significant risk of triggering disruptions to global energy distribution, given that the Strait of Hormuz remains the primary route for global oil trade.
“This uncertainty is reflected in the increased risk-off sentiment in global markets, evident in high volatility across various market indices, shifts in funds towards safe-haven assets, strengthening of the US dollar, and rising US Treasury yields,” Purbaya stated during a press conference on the 2026 APBN KiTa budget edition in Jakarta on Wednesday (11 March 2026).
According to Purbaya, such circumstances could trigger rapid changes in international financial market dynamics. Geopolitical uncertainty typically causes investors to redirect funds towards assets considered safer.
The first channel of impact stems from the trade sector. A spike in global oil prices could increase the value of Indonesia’s energy imports, potentially eroding the trade balance surplus and exerting downward pressure on the balance of payments.
The second channel originates from financial markets. When global sentiment shifts to become more cautious, foreign capital flows risk flowing out of the domestic market. This condition could trigger pressure on the stock market, the bond market, and the rupiah exchange rate.
The third channel derives from the fiscal side. Rising energy prices could increase the government’s subsidy burden and enlarge debt servicing obligations.
“The government continues to closely monitor geopolitical developments so that budgetary instruments can respond appropriately whilst maintaining economic stability and purchasing power,” Purbaya stated.
He added that the government has not yet identified any urgent need to adjust the budget position. Current average global oil prices remain below the assumption level that could place significant pressure on the national budget.
“At present, average oil prices stand at around 68 US dollars per barrel, so our fiscal condition remains sufficiently secure,” Purbaya said.
The government is also continuing to promote increased domestic oil and gas production as part of a strategy to strengthen energy resilience whilst maintaining fiscal stability in the medium term.