What Triggered Global Oil Prices to Breach USD 115 per Barrel
Global crude oil prices surged at the start of the week following heightened tensions between Iran and Israel in the Middle East. According to Trading Economics data as of Monday, 9 March 2026, West Texas Intermediate crude oil (WTI) futures contracts jumped to USD 115 per barrel. This increase followed a 31 per cent surge during intraday trading.
The jump represents the largest single-day gain since April 2020 and has brought oil prices to their highest level since June 2022. The rally extends a previous week’s gains of 35.6 per cent.
Oil price increases have been triggered by a series of supply disruptions from major Middle Eastern producers, particularly following complications with energy shipments through the Strait of Hormuz. This strait is one of the world’s principal oil distribution routes, so any disruption directly impacts global supply equilibrium.
In Iraq, production from three major oil fields in the southern region has reportedly fallen sharply. Oil production has dropped by approximately 70 per cent to just 1.3 million barrels daily from the previous 4.3 million barrels per day before the conflict began. This production decline directly tightens global oil supply.
Supply disruptions have also emanated from other Gulf producers. Kuwait, the fifth-largest oil producer within the Organization of the Petroleum Exporting Countries (OPEC), has begun cutting production since last Saturday and declared force majeure conditions. Qatar similarly announced cuts to liquefied natural gas (LNG) production last week.
Analysts also anticipate potential production reductions from the United Arab Emirates and Saudi Arabia, driven by storage facility capacity constraints that limit additional production space.
Meanwhile, Bank Mandiri’s Chief Economist Andry Armoro stated that surging energy prices have reignited concerns about global inflation. This environment has also triggered risk-off sentiment in financial markets.
According to him, investors are reassessing expectations for monetary policy easing by major central banks, including the Federal Reserve. “The market currently expects rate cuts from the US Federal Reserve to occur only in July and October 2026,” he said in a written statement on Monday, 9 March 2026.
Beyond energy price developments, market participants are awaiting the release of US inflation data this week. The PCE price index for January 2026 is expected to rise to 2.9 per cent on an annual basis, while core inflation is projected to increase to 2.5 per cent from the previous 2.4 per cent.
Finance Minister Purbaya Yudhi Sadewa stated that the government had previously calculated scenarios if global oil prices reached USD 92 per barrel throughout the year.
According to him, if average oil prices remain at that level for a full year, the State Budget deficit could widen to more than 3 per cent of gross domestic product.
“We have calculated that if prices are USD 92 on average throughout the year, the deficit could reach approximately 3.6 per cent,” said Purbaya at the Finance Ministry office in Jakarta on Friday, 6 March 2026.
However, he assessed that such a budget deficit widening could still be managed if the government implements savings across various budget line items deemed inefficient.
Purbaya explained that under normal conditions, global oil prices typically range around USD 60 per barrel. The government has also prepared alternative scenarios if prices rise to USD 72 per barrel, assessing fiscal conditions as relatively safe at that level.
He added that Indonesia previously faced situations when global oil prices breached USD 150 per barrel. Economic activity did experience a slowdown during that period, but it did not trigger a crisis.
Should oil prices spike excessively and burden the state budget, the government remains open to raising fuel prices. However, to date, the government has not discussed plans to increase subsidised fuel prices. “Our budget remains safe at this time,” said Purbaya.