Video: Parliament Reveals Impact of Rising Oil Prices on State Budget Burden and Fuel Prices

Amid the surge in global crude oil prices exceeding USD 110 per barrel, driven by tensions in the Middle East, the Indonesian government has assured that subsidised fuel prices will not rise until the end of 2026. This measure is intended to safeguard purchasing power and mitigate inflation spikes from global volatility, a move deemed highly appropriate by DPR Commission XI Chairman Mukhamad Misbakhun. Nevertheless, the government and DPR continue to evaluate the implications of holding subsidised fuel prices steady on the state budget and the national economy. Misbakhun highlighted that the global oil price increase poses risks to the economy due to the fuel subsidy, budgeted at Rp 380 trillion in the 2026 state budget assumptions; thus, higher global prices increase the fiscal burden, while raising subsidised fuel prices would amplify economic pressures. According to government calculations, if global oil prices hover around USD 100 per barrel, the state budget can still absorb the costs without price hikes by reallocating efficiencies to fuel subsidies. On the other hand, rising global oil prices also lift prices for CPO, nickel, coal, and food commodities. As Indonesia boasts a diverse array of flagship export commodities, the country stands to gain through windfall tax mechanisms. The government also ensures the state budget deficit remains below 3% to preserve market confidence in Indonesia.