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The Impact of the Iran War on the Indonesian Economy

A worker refuels a motorbike at a gas station in Jakarta, Indonesia, while others waiting for their turn, 01 April 2026. EPA/MAST IRHAM.

A worker refuels a motorbike at a gas station in Jakarta, Indonesia, while others waiting for their turn, 01 April 2026. EPA/MAST IRHAM.

The Iran war has entered its fifth week, but there are no signs of an end in sight. Meanwhile, concerns about crude oil supplies are growing due to the continued closure of the Strait of Hormuz.


Indonesia, like other Middle Eastern oil importers, is experiencing rising oil prices. If this situation persists, what steps should the Indonesian government take to address the oil shortages that are driving these price increases?

According to Dr. Arianto Patunru, Policy and Engagement Manager at the Crawford School of Public Policy, Indonesia Project at the Australian National University in Canberra, there are several actions the Indonesian government can take. These include reviewing the state budget, reallocating budget allocations, quickly transitioning to renewable energy, and reconsidering fuel subsidies.

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