The Strait of Hormuz Closure: What is Indonesia's Fate?
The world is standing on the edge of a steep precipice, possibly far steeper than the 1973 Oil Crisis.
Following the predicted massive air strikes by the United States and Israel on Iran’s heartland in March 2026, the outcome has resulted in sabotage of 20 per cent of the world’s energy corridors. Amidst the machinery of war, Tehran has finally played the ace card most feared by financial markets from New York to Tokyo: the total closure of the Strait of Hormuz.
The narrative of “energy security” that has been championed by Western nations now appears like a sandcastle swept away by the tide.
The Strait of Hormuz is the valve of the global economy. It is only approximately 33 kilometres wide at its narrowest point. Yet through this small passage, the stability of commodity prices on supermarket shelves worldwide is determined.
Based on fundamental energy data in March 2026, global oil consumption has reached 105 million barrels per day (bpd), whilst global production capacity operates on an extremely thin margin at this threshold. From this total volume, approximately 21 million bpd—equivalent to 20-21 per cent of global crude oil and refined product supply—must pass through the Strait of Hormuz.
When the International Energy Agency (IEA) proudly announced the release of emergency reserves totalling 400 million barrels, the market responded with considerable scepticism. Mathematically, the release of reserves labelled as “record-breaking” can only plug the supply gap caused by the Hormuz closure for 19 days on one hand and will only cover four days of global oil production on the other. After that? Darkness.
The IEA’s decision to release massive amounts of oil reserves is actually an indication of structured panic, not a solution.
If the war drags on and the Hormuz blockade persists for more than a month, these strategic reserves will evaporate completely, leaving the global market “naked” in the face of an energy shortage. This is why the price of Brent crude oil continues to remain above 100 dollars per barrel despite intervention efforts. The market understands very well that the IEA’s ammunition is only sufficient for one round, whilst this war has only just begun.
If the closure lasts a long time, the target for global crude oil prices is no longer about the question “will it continue to rise”, but rather “how destroyed will the global economic order become as a result”.
Crude oil prices are projected to easily breach the ceiling of 150-180 dollars per barrel in the medium term.