The Crucial Role of the Strait of Hormuz in the Global Energy System
The Indonesia Eximbank Institute assesses that the Middle East region plays a strategic role in the global energy system. This is because the region contributes more than 30% of world oil production, while around 20-30% of global oil trade passes through the Strait of Hormuz.
Head of the Indonesia Eximbank Institute, Rini Satriani, stated that disruptions to this route could quickly affect international energy prices and increase global trade logistics costs.
“Although Indonesia’s oil imports do not come directly from the Middle East, the impact can still be felt through regional trade routes,” she said in an official statement, quoted on Saturday, 21 March 2026.
She explained that around 75% of Indonesia’s oil imports come from Singapore and Malaysia, which are major oil trading and refining hubs in Asia. Both countries also import crude oil from the Middle East. Therefore, supply disruptions in that region could drive up energy prices faced by Indonesia.
The Indonesia Eximbank Institute, according to Rini, is also monitoring the impact of shifts in global energy distribution on major Middle Eastern oil-importing countries, such as China, Japan, India, and South Korea. These countries are primary energy consumers from the Gulf region and important export markets for Indonesia. Rising energy costs could pressure industrial activity in those countries and affect demand for Indonesian export products.
World oil prices throughout 2026 are projected to average between US$85-120 per barrel if geopolitical tensions persist for a relatively long period. This is higher than the early-year average, which remains around US$60 per barrel.
Rising energy prices and logistics costs, she said, could increase production costs across various global industrial sectors. For Indonesian exporters, this pressure would be more acute in sectors highly dependent on imported raw materials, such as manufacturing, petrochemicals, and basic metals. In such conditions, higher input costs could erode production margins, especially if global demand slows simultaneously.
Additionally, global financial market volatility could exert pressure on exchange rates in emerging markets, including Indonesia. A weakening exchange rate could raise import costs for domestic raw materials, thereby amplifying cost pressures on export-oriented sectors.
Amid these various risks, some Indonesian export commodities could actually see price increases alongside rising global energy prices. Coal, which contributes around 8-9% to total national exports, has potential for price boosts.
Meanwhile, crude palm oil (CPO) prices are showing a relatively strong trend, supported by solid global demand for agricultural commodities. Several commodities with local raw materials, amid previous interest rate cuts, are also lowering production costs, opening opportunities to enhance the competitiveness of Indonesian export products in global markets.
According to Rini, rising prices for energy and agricultural commodities could help support Indonesia’s export performance in the short term. However, volatility in metals and industrial sectors still needs to be anticipated, especially if the global economic slowdown deepens.
Considering commodity price dynamics and global trade conditions, Indonesia’s exports in 2026 are projected to grow in the range of 4-5%, with potential to increase to around 5-6% in 2027, assuming gradual recovery in global demand and easing of geopolitical tensions.