Video: CPO and Others Rise as Oil Prices Soar, Indonesia Benefits!

Jakarta, CNBC Indonesia - Amid the rise in global crude oil prices that have surpassed the USD 110 per barrel level due to tensions in the Middle East, the Indonesian government has assured that subsidised fuel prices will not increase until the end of 2026. This step is taken by the government to safeguard purchasing power and suppress inflation surges resulting from global turmoil, a move described as highly appropriate by DPR Commission XI Chairman Mukhamad Misbakhun. Nevertheless, the government alongside the DPR continues to calculate the impact of holding subsidised fuel prices on the state budget burden and the Indonesian economy. The global oil price increase, according to Misbakhun, poses risks to the economy due to its linkage with fuel subsidies, which under the 2026 state budget assumptions amount to Rp 380 trillion; thus, when global oil prices rise, the burden on the state budget increases, but if subsidised fuel prices rise, the ripple effects on economic pressures would also intensify. Based on government calculations, if global oil prices are around USD 100 per barrel, the state budget can still hold subsidised fuel prices steady without an increase by implementing budget efficiencies to allocate towards fuel subsidies. On the other hand, the rise in global oil prices also lifts prices of CPO, nickel, coal, and food commodities. Therefore, as a country with a diverse range of flagship export commodities, Indonesia has the potential to gain benefits through the windfall tax scheme. The government also assures that the state budget deficit will be kept below 3% to maintain market confidence in Indonesia.