Indonesia stands poised to face higher energy costs as global crude oil prices rise amid ongoing geopolitical tensions, particularly between the United States and Iran. An economist from Paramadina University estimates that for each USD 1 increase in global oil prices, the government’s fuel subsidy bill could expand by up to IDR 4 trillion, potentially impacting inflation and household purchasing power if not managed proactively. Alongside this, concerns over a weakening currency are prompting calls for diversified energy imports and budget reallocation to strengthen subsidy buffers and safeguard growth.

Despite these risks, there are positive strategies underway to mitigate pressures: authorities are exploring diversification of crude oil sources beyond the Middle East and reinforcing energy supply resilience, which could help support economic stability and consumer affordability. Such proactive fiscal and supply measures may help Indonesia maintain momentum toward broader economic goals while addressing oil-related cost pressures.
Source:
https://jakartaglobe.id/business/every-1-oil-rise-may-cost-indonesia-up-to-rp-4-trillion-economist-warns