Risk of Strait of Hormuz Closure Casts Shadow Over State Budget
JAKARTA — Rising tensions in the Middle East have raised fresh concerns about global energy distribution routes. Of particular concern is the risk of closure of the Strait of Hormuz, the strategically critical shipping lane for global oil transport. The Government assesses that this situation could have direct implications for Indonesia’s State Budget (APBN).
Deni Surjantoro, Head of the Communications and Information Service Bureau of the Ministry of Finance, said the escalation of regional conflict could potentially trigger increases in commodity prices, including Indonesian crude oil (ICP), coal, crude palm oil (CPO), and nickel. “The Middle East conflict has the potential to impact commodity price increases, inflationary pressure, exchange rate fluctuations, and interest rates, as well as economic activity in specific sectors,” Deni said in a brief statement on Monday (2 March 2026).
If the Strait of Hormuz is disrupted, global oil prices could spike significantly. The effects would extend beyond global markets to the domestic economy, particularly affecting energy subsidy burdens. Rising oil prices risk increasing state spending pressures to maintain affordable fuel and electricity prices for the public.
Nevertheless, the Government sees a positive side to rising prices for major export commodities. Coal, CPO, and nickel, whose prices are being driven upward, could potentially generate additional government revenue or windfall gains. However, such additional revenue must be balanced against potential surges in energy expenditure.
From a trade perspective, the direct impact of the conflict is assessed as relatively limited. Indonesia’s export value to Gulf nations stands at approximately 8.7 billion US dollars, substantially smaller than total national exports approaching 300 billion US dollars. “The impact on exports is relatively limited, though the risk of Strait of Hormuz closure remains a concern requiring vigilance,” Deni said.
The Government has reaffirmed its commitment to maintaining the APBN deficit at a controlled level below 3 percent of gross domestic product (GDP). Fiscal stability is viewed as essential to ensure priority programmes continue and public purchasing power is not disrupted.
Going forward, the Government will continue coordinating with monetary authorities and the financial sector to mitigate various potential risks. For the public, the most tangible concern is how the nation safeguards energy prices and economic stability amid ongoing global turbulence.