Two-Week US-Iran Ceasefire Not Enough, Global Supply Chain Still Disrupted
An economist from Andalas University, Syafruddin Karimi, views the plan for a two-week ceasefire between the United States (US) and Iran as providing relief to global markets, as reflected in the fall in oil prices. However, this pause in the conflict is deemed insufficient to restore the global supply chain that was previously shaken, especially along the vital Strait of Hormuz route.
He explains that the physical recovery of goods flow does not occur automatically. Around 130 million barrels of oil, 46 million barrels of refined fuels from crude oil, and 1.3 million tonnes of liquefied natural gas (LNG) remain held up on ships waiting for safe passage. Shipping companies, vessel operators, and insurers will also continue to calculate risks carefully before sending fleets back to the area.
The disruption to oil exports through Hormuz, which reached about 13 million barrels per day in March, has also forced producers to cut output significantly. Meanwhile, restarting oil fields, terminals, and refineries takes weeks or even months.
“So, two weeks is enough to calm market panic, but not enough to return the global supply chain to normal,” Syafruddin told Media Indonesia on Wednesday (8/4).
He states that energy disruptions can quickly turn into global inflation, even before supply shortages are truly felt in the real sector. Markets usually first channel energy shocks into oil contract prices, shipping costs, insurance fees, and inflation expectations.
When Hormuz is closed and the conflict escalates, markets immediately calculate the risks of a surge in global energy prices and potential global slowdown. This, Syafruddin says, is reasonable because the route handles about one-fifth of global oil shipments. Once disrupted, energy-importing countries immediately face threats of rising production costs, transportation, logistics, and even food prices. Asia is a particularly vulnerable region because it imports about 60% of its oil and 80% of its gas from the Middle East.
“That means the transmission from energy disruption to inflation does not wait for months,” Syafruddin says.
Price expectations can move within days, then passed on to import prices, freight tariffs, and distribution costs in a short time. The ceasefire does reduce short-term risks, but the wounds in the energy market mean the threat of global inflation has not fully subsided.
The impact on domestic fuel oil (BBM) prices and subsidy burdens is also seen as significant, especially if the ceasefire does not hold or supply recovery is slow. As a net energy importer, Indonesia remains vulnerable to global oil price volatility that can quickly increase import costs and pressure domestic stability.
Syafruddin notes that the two-week ceasefire did ease pressure for a time. Brent oil prices fell sharply, while the rupiah strengthened to around Rp17,010 to Rp16,995 per US dollar. Nevertheless, the global oil market is estimated to remain tighter by about 3–5 million barrels per day compared to pre-conflict expectations in the coming years.
“Therefore, the risks to domestic BBM and subsidies are still present, especially if the conflict reignites or logistics recovery is disrupted,” he says.
On the other hand, the rupiah’s strengthening is expected to be limited and prone to reversal. This movement also occurred regionally, with other ASEAN currencies such as the Malaysian ringgit, Philippine peso, Singapore dollar, and Thai baht also strengthening.
Meanwhile, the US dollar tends to weaken globally, and gold prices remain strong, reflecting the market’s continued search for safe-haven assets amid uncertainty.
As long as the ceasefire holds, the Strait of Hormuz remains open, and the US dollar does not strengthen sharply again, the rupiah has a chance to stay below Rp17,000 per US dollar.
“However, market players still view this situation as fragile, so the recovery is more temporary in nature,” he adds.
Contacted separately, senior economist and founder of the Institute for Development of Economics and Finance (Indef), Didin S. Damanhuri, views the permission for two Pertamina tankers to cross the Strait of Hormuz as positive news for Indonesia’s oil supply. This condition is seen as able to suppress potential shortages and energy price surges domestically, while opening opportunities for the government to improve fiscal conditions. He emphasises that the budget deficit needs to be kept below 3%.
Nevertheless, he reminds that Indonesia’s fiscal condition still faces pressure, given that the deficit target has been set at 2.9% even without geopolitical conflicts. To maintain fiscal sustainability, Didin believes state spending needs to be more efficient, particularly in programmes like the Free Nutritious Meals (MBG) and other policies such as the Red White Village Cooperatives.
“This efficiency step is important to improve fiscal health and avoid additional foreign debt that could burden the state’s finances,” he asserts.
Didin opines that the MBG programme budget is still too large and not fully on target because it does not flow much to the MSME sector.
“Therefore, he suggests reducing the MBG budget by up to 50% and focusing it on addressing stunting, which is still around 19–20%, so that the benefits are more optimal,” he proposes.
Didin adds that if the plan to add new debt in 2026 amounting to Rp826 trillion can be curbed, then the debt principal and interest payment burden estimated at Rp1,650 trillion can also be reduced. These savings are seen as able to be redirected to drive higher economic growth while reducing inequality, particularly through strengthening people’s purchasing power, social assistance programmes, and capital support for MSMEs.