Tensions between the United States and Iran have disrupted energy supplies through the Strait of Hormuz in March 2026, spiking oil and LNG prices and affecting Indonesia. The country relies on imported fossil fuels but holds opportunities from critical mineral reserves. Experts recommend accelerating electric vehicle adoption and leveraging natural resources.
Geopolitical tensions between the United States and Iran have disrupted global energy distribution through the Strait of Hormuz in March 2026. This has caused significant spikes in oil and liquefied natural gas (LNG) prices, given high reliance on imported fossil fuels, including in Indonesia.
Indonesia holds abundant critical mineral reserves, such as 6.74 billion tons of nickel resources and 3.13 billion tons of reserves, 18.336 billion tons of copper resources and 2.86 billion tons of reserves, 7.79 billion tons of raw bauxite ore, and 8.27 billion cubic meters of tin resources, according to Ministry of Energy and Mineral Resources data as of December 2024. Fabby Tumiwa, CEO of the Institute for Essential Services Reform, stated, “In the midst of rising geopolitical tensions and global competition over critical minerals, Indonesia holds a very strategic position because its nickel, copper, bauxite, and tin reserves form the main foundation of industry.”
Accelerating electric vehicle adoption is seen as strategic to mitigate oil price spikes' impact on Indonesia's state budget. Automotive observer Martinus Pasaribu noted that 60-70 percent of national oil needs come from imports, with domestic production around 600,000 barrels per day. A US$1 per barrel oil price rise could add Rp8-10 trillion to subsidies, potentially reaching Rp300 trillion annually at US$90-100 per barrel.
Using 1 million electric cars saves 1.25 million kiloliters of fuel oil per year, while 5 million electric motorcycles save 1.75 million kiloliters, totaling Rp30-40 trillion in foreign exchange savings. Martinus emphasized integrated policies for fiscal incentives, charging infrastructure, and the national electric vehicle industry ecosystem.
