US-Israel Attack Iran: Strait of Hormuz Closed, Oil and Gold Prices Surge
The United States and Israel launched military strikes against multiple locations in Iran, including the capital Tehran, on Saturday, 28 February 2026, amid ongoing negotiations over Iran’s nuclear programme and ballistic missile capabilities, following weeks of escalating threats from Washington.
Iran responded by targeting American military facilities in Bahrain, Qatar, Kuwait, and the United Arab Emirates (UAE). Bahrain confirmed that the headquarters of the US Navy’s Fifth Fleet became a missile target.
This intensifying tension has worsened the geopolitical situation in the Middle East and triggered a sharp rise in global oil prices, gold prices, and pressure on global financial markets.
According to Gulf News reporting, numerous vessels in the Gulf received warnings via high-frequency radio broadcasts from Iran’s Revolutionary Guards (IRGC) to refrain from transiting the strait.
The Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. At its narrowest point, it measures only approximately 33 kilometres wide, with shipping lanes in each direction spanning 3 kilometres.
Approximately 20 million barrels of crude oil, condensate, and fuel products transit the strait daily, according to Vortexa data. Roughly 82 per cent of crude oil and fuel shipments are destined for Asia, including China, India, Japan, and South Korea.
The US Navy has urged vessels to avoid the area, whilst the Greek Ministry of Transport has advised its fleet to avoid the Persian Gulf, Gulf of Oman, and Strait of Hormuz.
Impact on Indonesia’s Fiscal Position and Fuel Subsidies
The Middle Eastern tension is also expected to affect Indonesia. Nailul Huda, an economist at the Center of Economics and Law Studies (Celios), emphasised that rising global oil prices could increase the government’s fuel subsidy burden.
“Tensions in the Middle East could drive up global oil prices. When oil prices rise, the government’s fuel subsidy burden will swell. The budget could collapse if there is no subsidy reallocation,” he stated.
If oil prices in the state budget are significantly exceeded, the government’s fiscal space will come under pressure, as it must cover the difference between the economic price and the retail price to consumers.
Moreover, given the current fiscal condition combined with global uncertainty, government revenue cannot serve as a solution to address the swelling fuel subsidy budget.
On the other hand, options for taking on additional debt are also increasingly constrained, as reports from international rating agencies such as Moody’s and S&P have raised concerns about Indonesia’s fiscal management quality.