Tangerang. While Indonesia remains vulnerable to global oil price hikes as a net oil importer, surging oil prices often bring a silver lining — a boost in the prices of the country’s top export commodities like coal and palm oil, a senior lawmaker said on Thursday.
Mukhamad Misbakhun, chairman of the House of Representatives’ Commission XI overseeing finance and banking, said escalating tensions in the Middle East may push global oil prices higher. However, Indonesia should not overreact as the country typically enjoys a windfall from rising prices of other key exports.
“When global oil prices increase, so do the prices of our major commodities such as crude palm oil (CPO) and coal, which significantly boost state revenues,” Misbakhun said during a discussion hosted by B-Universe Media Holdings in Pantai Indah Kapuk 2, Tangerang.
He added that Indonesia’s domestic oil production also benefits in such situations. “All of our national oil output is sold to export markets at premium prices — usually a few dollars above the global price,” Misbakhun said.
Oil prices have softened after a brief surge of about 3 percent following Israeli strikes on Iran’s nuclear and defense facilities. With a ceasefire now holding after the 12-day conflict between Israel and Iran, Brent crude slipped to around $68 per barrel on Thursday, down from $77 last week, as concerns over supply disruptions and a possible blockade of the Strait of Hormuz eased.
Misbakhun noted that the 2025 state budget is designed to withstand external shocks, including volatile energy prices. The budget assumes an average global crude price of $82 per barrel, which means the recent price movements remain within the government’s fiscal capacity to maintain energy security.
“When oil prices rise beyond our budget assumptions, that’s when the government steps in — partially subsidizing fuel while also raising fuel prices,” Misbakhun explained.
Energy expert Satya Widya Yudha, who spoke at the same event, warned that the Israel-Iran conflict is a reminder of how fragile global oil supplies are. He stressed the importance of accelerating Indonesia’s energy transition to reduce dependence on imported fossil fuels.
“Any disruption at the Strait of Hormuz alone can drive global oil prices up by $10 per barrel,” Satya said.
The Strait of Hormuz — a narrow waterway between Oman and Iran — is one of the world’s most critical oil chokepoints. Roughly 20 million barrels of oil per day, or 20 percent of global consumption, passed through the strait in 2024, according to the Associated Press. Much of this oil is destined for Asian markets.
Satya acknowledged that Indonesia has made progress in diversifying its oil supply sources, including purchases from African countries and, to a lesser extent, the United States.
“Still, the current wave of geopolitical tensions serves as a wake-up call for Indonesia to intensify efforts toward energy independence — through both renewable energy development and boosting domestic oil and gas production,” he said.
Indonesia’s current oil production stands at approximately 620,000 barrels per day, meeting only about half of its domestic demand, according to official estimates.
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