The Strait of Hormuz and Indonesia’s Energy Dilemma: An Ongoing Crisis

The Critical Situation in the Strait of Hormuz

The closure of the Strait of Hormuz has emerged as a significant concern amid escalating tensions in the Middle East. This crucial waterway is a vital artery for global oil and gas shipments, making up about one-fifth of the world’s oil consumption. In 2024 alone, approximately 20.3 million barrels per day flowed through the strait, highlighting its importance in international energy trade. With the current geopolitical climate, the Strait of Hormuz stands vulnerable—its narrowest point spans merely 33 kilometers, and disruptions here could have far-reaching repercussions.

Indonesia’s Reliance on Middle Eastern Oil

For Indonesia, the ramifications are particularly dire. Almost 25% of the nation’s oil imports originate from the Middle East and transit through the Strait of Hormuz. With domestic fuel reserves depleting rapidly, the country currently has stockpiles that only last for 20 days. Such limitations are dangerously below the 90-day net import reserve recommended by the International Energy Agency. The Energy and Mineral Resources Ministry has revealed that in 2024, domestic fuel consumption reached 82.9 million kiloliters, translating to around 227,136 kiloliters daily. The pressing need for strategic planning is intensified as the Indonesian government grapples with energy security in an increasingly volatile landscape.

Current State of Fuel Reserves

The specifics of Indonesia’s fuel reserves paint a troubling picture. Key products are alarmingly low on buffer reserves: Liquefied Petroleum Gas (LPG) has only a 15-day supply, while diesel products typically last around 18 days. Pertalite, a subsidized high-octane gasoline, is good for 19 days, whereas premium options such as RON 92 gasoline and jet fuel offer slightly better durations at 26 and 29 days, respectively. Other products have slightly longer availability, but these levels are still inadequate given the potential for supply chain disruptions due to geopolitical conflicts.

Economic Implications of Rising Oil Prices

The U.S.-Israeli conflict with Iran has exacerbated the oil supply situation, causing prices to soar. As of March 9, 2026, both Brent and West Texas Intermediate crude oil futures surged to nearly $120 per barrel, following production cuts from several Arab Gulf states. Although prices have eased slightly, they remain significantly higher than Indonesia’s predicted average of $70 per barrel for the 2026 state budget. Each $1 increase in crude prices could impose an additional burden of approximately Rp 10.3 trillion (around $608 million) in energy subsidies for Indonesia, far outweighing the additional tax revenue generated.

Short-term Effects on Inflation and Consumer Behavior

Inflationary pressures arising from increased fuel prices could further complicate the Indonesian economy. For instance, estimates indicate that a 10% increase in Pertalite prices could push inflation up by 0.27 percentage points, while the same percentage increase in diesel could lead to an inflation rise of about 0.05 percentage points. Public awareness about these potential disruptions has led to panic buying in various regions, exacerbating supply chain issues, especially in Aceh, North Sumatra, and Riau. These concerns are particularly poignant since fuel consumption typically spikes ahead of religious holidays like Idul Fitri, intensifying demand.

Government’s Response and Strategic Outlook

As these issues unfold, the administration led by President Prabowo Subianto is under increasing pressure to secure alternative energy supplies and stabilize the domestic market. With Pertamina, the state-owned oil and gas holding company, holding the majority of Indonesia’s energy reserves, strategic planning and proactive measures are crucial. The government must work diligently to explore diversified sources of fuel and find ways to enhance storage capacities to meet IEA recommendations, thereby safeguarding the nation’s energy future amid an unpredictable global landscape.

The situation remains fluid, as both local governments and citizens alike grapple with the immediate consequences of rising energy prices and supply chain disruptions, all influenced by a broader regional conflict that shows no signs of abating.