JakartaGlobe-June 18
Indonesia is bracing for heightened economic risks as the escalating conflict between Iran and Israel drives global oil prices higher and adds pressure on the state budget. Finance Minister Sri Mulyani Indrawati warned Tuesday that the price surge, combined with broader geopolitical and fiscal uncertainty, poses a serious challenge to Indonesia’s economic stability. “On the third day of the Iran-Israel war, oil prices have risen by more than 8 percent,” Sri Mulyani said during the APBN KiTa press conference at the Finance Ministry in Jakarta. She noted that the sudden jump to over $78 per barrel may strain domestic inflation and state finances. Data show that global oil markets remain volatile. Brent crude futures settled up $3.22, or 4.4 percent, at $76.45 a barrel on Wednesday, while US West Texas Intermediate (WTI) crude rose $3.07, or 4.28 percent, to $74.84 per barrel. The spike occurred despite no major damage so far to Iran’s key energy infrastructure or oil and gas flows. Still, Iran was forced to halt partial gas production at its South Pars field, jointly operated with Qatar, after an Israeli strike caused a fire. Israel also reportedly targeted Iran’s Shahran oil depot, raising fears that the conflict could escalate further and disrupt global energy supply chains. “This conflict doesn’t just impact commodity prices. It also puts pressure on exchange rates, interest rates, and capital flows,” said Sri Mulyani. “The dangerous combination of rising prices and weakening global growth needs to be closely watched.” Despite external headwinds, she emphasized that Indonesia’s domestic economy remains resilient through May 2025. Inflation stood at a manageable 1.6 percent, helped by strong food supply and harvest-driven deflation in key commodities like rice and corn. Domestic consumption and infrastructure investment also showed positive trends, with electricity use in the business sector up 4.5 percent and building investment rising nearly 30 percent in April. Read more at: https://jakartaglobe.id/business/indonesia-pertamina-on-alert-as-iranisrael-conflict-drives-up-oil-prices
