Strait of Hormuz Closure: Experts Predict Oil Prices Will Soar
Jakarta — Iran’s decision to close the Strait of Hormuz is expected to have serious implications for both the global and domestic economy.
The policy was adopted in response to the death of Iran’s Supreme Leader, Ayatollah Ali Khamenei, in an escalation of conflict involving the United States and Israel in recent days.
Bhima Yudhistira, Executive Director of the Center of Economic and Law Studies (CELIOS), projects that global crude oil prices could reach USD 100 to USD 120 per barrel. Currently, oil prices have already risen approximately 13.4% in the past month, and the rally is expected to continue.
“The disruption of the Strait of Hormuz will impact 20% of global oil supply,” Bhima told CNBC Indonesia on Monday (2 March 2026).
According to Bhima, the situation is worsened by heightened security risks in the conflict zone, including rejection of insurance applications for logistics vessels transiting the area. This could impede distribution and complicate oil imports for many countries, including Indonesia.
As a net oil importer, Indonesia will face significant fiscal consequences. Under the 2026 state budget simulation, each USD 1 increase in oil prices above budget assumptions can add approximately Rp10.3 trillion to government expenditure.
If oil reaches USD 100 to USD 120 per barrel, then government spending could increase by up to Rp515 trillion in 2026. This includes not only fuel subsidies but also compensation to Pertamina and electricity subsidies.
“There is a direct double burden to the state budget. The situation is worsened by concerns over flight to quality from investors, causing rupiah depreciation,” Bhima said.
Furthermore, he noted that the food sector is vulnerable to impacts, particularly those sensitive to currency fluctuations and import supply chain disruptions, such as soybean, wheat, and meat. Imported inflation from oil and food will create a downward spiral in consumer purchasing power.
“The public is clearly unprepared for excessive increases in fuel prices and volatile food inflation. If the conflict continues and expands, many developing countries could face economic crisis,” he said.
Separately, oil and gas practitioner Hadi Ismoyo views the latest Middle East conflict as far more serious than previous tensions. In his view, the death of Supreme Leader Ayatollah Ali Khamenei marks a turning point in escalating conflict, including the closure of the Strait of Hormuz.
“This means 20% of global oil supply will be lost, and 30% of global LNG supply will disappear from the market. Prices of oil and LNG commodities will rise significantly,” he said.
He projects conditions will worsen going forward. Given that Imam Khamenei was not only the Supreme Leader determining strategic policy but also the Supreme Leader among Shia clerics deeply revered by his followers.
“This will awaken deep-seated grievances like the death of Imam Hussein at the Plains of Karbala, with the US and Israel responsible for his cruel killing,” he said.