When Energy Crises Are No Longer Surprising

The world is not truly afraid of war, but it fears energy prices. When conflicts in the Middle East heat up again, global markets do not wait for diplomatic outcomes. They react immediately through the most decisive channel: oil prices.

The far more decisive question is a simple one: what will the price of oil be tomorrow morning? As has happened repeatedly, the impact does not stop at global markets. It quickly spreads to the state budgets of countries dependent on energy imports, including Indonesia.

Within days, this mechanism operates with almost mathematical precision. On 31 March 2026, in his analysis on CNBC Indonesia, Simatupang warned that escalation in the Strait of Hormuz could pressure Indonesia’s energy resilience and increase the fiscal burden. A day later, the government responded. An additional energy subsidy of around Rp100 trillion was announced to maintain domestic price stability.

From this question arises the pressure on Indonesia’s State Revenue and Expenditure Budget (APBN). Ironically, however, this pressure emerges amid fiscal conditions that appear strong.

In a Working Meeting with the Indonesian House of Representatives (DPR RI) on 6 April 2026, Finance Minister Purbaya Yudhi Sadewa emphasised that the APBN remains solid and capable of acting as a shock absorber amid global uncertainties. Up to the end of March 2026, state revenues reached Rp574.9 trillion, a 10.5% year-on-year growth, with tax receipts surging 20.7%. Even Value Added Tax (PPN and PPnBM) grew 57.7%, indicating that domestic economic activity remains robust.

On the expenditure side, the APBN deficit remains controlled at 2.9% of GDP. The government also has a fiscal cushion in the form of a Budget Surplus Balance (SAL) of around Rp420 trillion. With this situation, the government states it can keep subsidised fuel prices stable, even if global oil prices are around USD100 per barrel.

At face value, Indonesia’s fiscal foundation appears solid. However, behind this strength lies a deeper vulnerability that becomes even more apparent when global crises strike. This shift did not happen suddenly. Over the past three decades, the nature of global conflicts has changed. In the post-Cold War era, conflicts like the Gulf War or the Iraq War did impact energy, but the effects were relatively localised.

Now, conflicts are directly linked to the global economic system. Wars like Russia’s invasion of Ukraine have triggered cross-regional energy crises. Tensions in the Middle East, including the Gaza War and the escalation of the US-Iran War, amplify the risks of disruptions to global energy supply routes. In this new configuration, conflicts no longer end on the battlefield. They are immediately translated into energy price shocks.

For Indonesia, the mechanism is almost automatic. Rising global oil prices push the Indonesian Crude Price (ICP) beyond APBN assumptions. When the ICP rises, the energy subsidy burden increases. Ultimately, the APBN is forced to act as the main buffer. This is where the paradox emerges. The APBN is indeed strong. But precisely because it is strong, it continues to be used to absorb shocks without reducing the source of those shocks.

The additional Rp100 trillion energy subsidy in early April 2026 is the most concrete example. This policy is necessary to maintain price stability and purchasing power. Yet it also confirms that every rise in global energy prices will always lead to domestic fiscal pressure.

This development has also been anticipated. In his article on CNBC Indonesia on 31 March 2026, Simatupang highlighted how the crisis in the Strait of Hormuz could pressure Indonesia’s energy resilience and increase the fiscal burden. That analysis positions energy as a vulnerable point in national economic stability.

A few days later, on 6 April 2026, Purbaya Yudhi Sadewa reiterated that the impact of global conflicts could make Indonesia’s economy “as gloomy as other countries” if external pressures are not managed well.

What occurred in that timeframe is not merely a series of events. It is a consistent pattern. Analysis identifies risks. Policy responds to pressures. The government confirms threats, and everything points to the same conclusion: Indonesia’s energy vulnerability is structural.

This pattern is not new. Every time oil prices rise, subsidies increase and fiscal space is pressured. When prices stabilise again, the push for structural reforms fades. This cycle repeats without sufficient fundamental changes to break the dependency.

In this context, the additional Rp100 trillion is not merely a fiscal policy. It is the cost of dependency, both on energy imports, delays in diversification, and the slow pace of energy transition. The impacts also extend widely. Rising energy prices will spread to logistics costs, food prices, and ultimately people’s purchasing power. Subsidies can indeed dampen direct impacts, but without structural changes, the burden is merely shifted to the future.

What appears as geopolitical conflict abroad ultimately becomes a domestic fiscal issue. If global oil prices remain high, pressure on subsidies will continue to rise. At the same time, fiscal space for productive spending may be squeezed. In the long term, this situation could limit the state’s ability to drive more sustainable growth.

In the end, the issue does not lie in the Rp100 trillion figure itself. The issue is what that figure represents. It is not merely a policy. It is a signal. A signal that Indonesia’s economy has strong fiscal buffers but has not yet changed enough to escape the same cycle. And the ga