Escalation of conflict between the US, Israel, and Iran in the Middle East has driven global oil prices above US$100 per barrel, weakening the rupiah to Rp17,000 and sharply dropping the IHSG. The Indonesian government asserts the domestic economy remains in expansion despite risks of inflation and layoffs. Energy Minister Bahlil Lahadalia guarantees no increase in subsidized fuel prices until Eid.
Geopolitical tensions in West Asia intensified since February 28, 2026, when the US and Israel launched major attacks on Iran, killing over 1,000 people including Iran's Supreme Leader Ali Khamenei. Iran retaliated with strikes on US bases and Israeli facilities. On March 8, 2026, US-Israeli airstrikes targeted Iranian oil storage in Tehran, severely damaging the Shahran Oil Depot.
Brent crude oil prices surged to US$118 per barrel on March 9, 2026, the highest since June 2022, sparking economic turbulence in Indonesia. The rupiah weakened to Rp17,000 against the US dollar, while the IHSG plunged 3.48% or 264.62 points to 7,321.07 in the morning session. Basic materials sector fell 5.55%, followed by cyclical consumer and industrial sectors.
Finance Minister Purbaya Yudhi Sadewa stated, “Ekonomi sedang ekspansi. Resesi saja belum, melambat pun belum,” when met at Tanah Abang Market, Jakarta, on March 9, 2026. He emphasized the weakening was driven by global sentiment and energy price hikes, but fiscal space remains sufficient for fuel subsidies without price increases. The state budget assumes oil at US$70 per barrel, with monitoring of the yearly average.
Energy Minister Bahlil Lahadalia affirmed, “Saya pastikan, sampai dengan hari raya ini insyaAllah enggak ada kenaikan harga BBM subsidi,” at the Ministry of Energy and Mineral Resources office. Supply is secure despite global price rises; options include accelerating biodiesel from B40 to B50 and ethanol E20 blending.
DPR member Pulung Agustanto expressed concerns over energy surges leading to layoffs in textiles, footwear, and manufacturing. “Ketergantungan dunia usaha pada pasokan energi... bisa berdampak serius. Saya mengkhawatirkan terjadi gelombang PHK di Indonesia,” he said in a written statement on March 9, 2026. Risks of inflation and reduced purchasing power also emerge, though InJourney remains optimistic on strong domestic tourism with projected 14.4% visitor growth.
Analyst Ibrahim Assuaibi noted oil prices reached US$117 per barrel due to Middle East tensions, potentially straining finances if prolonged.
