The escalation of conflict between Iran and Israel is feared to have a significant impact on world crude oil supply and prices. This was conveyed by Professor of International Economics at the University of Indonesia, Mari Elka Pangestu, and Director General of Oil and Gas at the Ministry of Energy and Mineral Resources, Tutuka Ariadji.
Potential Supply Shock and Rising Oil Prices
Mari Elka Pangestu explained that US sanctions against Iran, including restrictions on oil sales, could lead to a loss of crude oil supply in the global market. Disruptions in the Strait of Hormuz, a vital global oil trade route, could also exacerbate the situation.
As a result, world oil prices are predicted to rise significantly. This rise could trigger an increase in fuel prices in Indonesia and impact inflation and the country’s budget deficit.
Indonesian Crude Oil Price Breaks US$100 per Barrel
Director General of Oil and Gas at the Ministry of Energy and Mineral Resources, Tutuka Ariadji, confirmed that the impact of the conflict has caused Indonesian crude oil prices (ICP) to breach US$100 per barrel.
Although Indonesia does not import fuel from Iran, Tutuka emphasized that the government has prepared anticipatory measures. The source of oil imports is diverted to other countries such as Singapore, Malaysia, India, Nigeria, Saudi Arabia, Angola, and Gabon.
The escalation of the Iran-Israel conflict has the potential to have serious consequences for world oil supply and prices, including Indonesia. The Indonesian government has taken anticipatory steps to minimize the negative impact of this situation.