Subsidies to swell due to war, Bahlil: We're calculating carefully

Jakarta, CNBC Indonesia – Energy and Mineral Resources Minister (ESDM) Bahlil Lahadalia has acknowledged that escalating geopolitical tensions in the Middle East are affecting global energy prices, which in turn influence domestic energy subsidies. Global crude prices have continued to rise, exceeding the assumptions in the 2026 state budget of US$70 per barrel. Refinitiv data cited on Thursday (5 March 2026) show Brent crude at US$83.82 per barrel, up 3%, and WTI at US$77.17, up 3.4%.

“What cannot be avoided is that there is an increase and that it affects subsidies. So now we are calculating carefully,” Bahlil said at the ESDM Ministry on Thursday (5 March 2026).

The rise in global crude prices is triggered by unresolved conflict between Iran and Israel alongside the United States. The conflict has repercussions for the vital artery of global oil flows, namely the Strait of Hormuz in the Persian Gulf, which is recorded to handle oil movements of up to 20.1 million barrels per day. Indonesia is among the countries affected by the closure of Hormuz. As a net importer, 19% of national oil imports come from the Strait of Hormuz.

However, Bahlil assured that the availability of Bahan Bakar Minyak (BBM) and Liquefied Petroleum Gas (LPG) in Indonesia remains secure. The government continues to prepare alternatives to ensure the commodity is available for the public. “We know geopolitics is not in optimal condition, but in terms of the government’s readiness to design and prepare all alternatives for the availability of BBM and LPG, God willing it is safe,” he said.

Previously, Pertamina Vice President of Corporate Communications Muhammad Baron confirmed that currently crude oil cargoes originating from the Middle East account for around 19% of the total import value. “Around 19% and we have already implemented distribution through regular, alternative, and emergency systems. So for national energy resilience, Pertamina has communicated that system to meet national needs,” Baron said at Grha Pertamina on Wednesday (4 March 2026). Pertamina is currently coordinating with related parties to ensure it can continue to meet national energy needs. “So the alternatives we are implementing are in progress as this is only a matter of days. We will update the media on the readiness of these alternative processes,” Baron asserted.