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Indonesia on High Alert as US Strikes Iran, Oil Prices Surge

Jakarta – The escalating conflict between Israel and Iran, now involving direct US military intervention with attacks on Iranian nuclear facilities, has triggered serious concerns in Indonesia. Economists are warning of significant economic repercussions and urging immediate goverment action.

Economists Urge Swift Action to Mitigate Economic Impact

Andalas University economist Syafruddin Karimi emphasized the urgency for Indonesia to address the potential economic fallout. He stated that the conflict’s impact extends beyond the middle East, threatening the economic and geopolitical stability of developing nations, including Indonesia. Karimi called for immediate emergency measures to counter the anticipated surge in global oil prices.

did you Know? the Strait of Hormuz, a critical chokepoint for global oil supplies, sees approximately 21 million barrels of crude oil pass through it daily, representing around 21% of global petroleum consumption[[EIA]. Any disruption there could send prices soaring.

Karimi highlighted that Indonesia’s reliance on energy imports would create a significant fiscal burden if oil prices exceed $100 per barrel. Since June 10, 2025, Brent crude oil prices have already jumped 18%, reaching a nearly five-month peak of $79.04 on June 19, 2025, following the Israeli strikes Nasdaq.

“Delaying the revision of the energy subsidy policy will only worsen the state budget deficit,” Karimi warned.

Rupiah Stabilization and Inflation Concerns

Experts also suggest that Bank Indonesia and the Ministry of Finance must enhance their coordination to stabilize the Rupiah. The current global instability could trigger capital outflows, putting downward pressure on the exchange rate and fueling inflation.

Pro Tip: Monitoring the Jakarta Interbank Spot Dollar Rate (JISDOR) can provide insights into the Rupiah’s performance and potential intervention points for Bank Indonesia.

“Monetary intervention must be accompanied by sharpening policy communication so that the market remains calm,” Karimi added.

Economic Growth at Risk

Bhima Yudhistira, Executive Director of the Center for Economic and Law Studies (Celios), echoed these concerns, noting that the widespread Middle East conflict could significantly drive up oil prices. Higher fuel import costs will likely cause government-regulated price inflation to surge, especially when consumer purchasing power is already weak.

“This is not a good inflation; once the price of fuel rises, forwarded to business actors and consumers makes the growth of household consumption slowed down,” Bhima explained.

A prolonged war could jeopardize Indonesia’s 5% economic growth target, with the external environment posing significant challenges, compounded by government budget inefficiencies.

“the projection if the war lasts longer, the Indonesian economy will only grow 4.5% year on year this year. The more severe to reach the target of 8% of economic growth because the external situation is too heavy,” he said.

Potential Economic Impacts on Indonesia
Factor Potential Impact mitigation Strategy
Oil Price Surge Increased fiscal burden, higher inflation Revise energy subsidies, diversify energy sources
Rupiah Depreciation Increased import costs, capital outflow Monetary intervention, policy communication
Economic Growth Slowed growth, reduced consumer spending Improve budget efficiency, stimulate domestic demand

Indonesia’s Economic Vulnerability: A Ancient Viewpoint

Indonesia’s susceptibility to global oil price fluctuations is not new.Throughout its history, the nation has faced economic challenges stemming from its dependence on imported energy. Past crises have prompted various policy responses, including subsidy adjustments and diversification efforts. Understanding these historical trends is crucial for formulating effective strategies to navigate the current crisis.

Frequently Asked Questions

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Trump Orders Missile Strikes on Iranian Nuclear Facilities Amid Escalating Tensions

Jakarta, Indonesia – President Donald Trump has ordered missile strikes against three Iranian nuclear facilities-Natanz, Esfahan, and Fordow-following unsuccessful negotiations between Iran and European nations regarding nuclear programs and ongoing tensions with Israel. Trump announced the destruction of the Fordow facility on his social media account on Sunday, June 22, 2025.

US Strikes Iran After Failed Negotiations

The US President stated on his Instagram account, “There is no military in the world that is able to do this. Now is the time of peace.” The strikes follow a week of intense air battles between Israel and Iran, resulting in casualties on both sides. The Israeli Public Broadcasting Institute reported that Israel “fully coordinated” with Washington concerning the US attacks.

A White House official confirmed that Trump spoke with Israeli Prime Minister Benjamin Netanyahu after the strikes were launched. Israel has stated its actions are aimed at preventing Iran from developing nuclear weapons, while Iran maintains its nuclear program is for peaceful purposes only.

Congressional Debate Over Presidential Authority

In recent days, Democratic and Republican members of Congress have debated whether Trump requires congressional approval before deploying the US military against Iran. Israeli military officials reported conducting additional attacks in Southwest iran, targeting numerous military objectives.

Did You No? The International Atomic Energy Agency (IAEA) has been monitoring Iran’s nuclear activities as 2003, raising concerns about potential military applications .

Timeline of Recent Events

Date Event
June 15, 2025 Intense air battles begin between israel and iran.
June 21, 2025 Israeli military officials report attacks in Southwest Iran.
June 22,2025 Trump orders missile strikes on Natanz,Esfahan,and Fordow.

The Role of international Agreements

The Joint Complete Plan of Action (JCPOA), also known as the Iran nuclear deal, was an agreement reached in 2015 between Iran and several world powers, including the United States, to limit iran’s nuclear program in exchange for sanctions relief. The United States withdrew from the JCPOA in 2018 under President Trump, reimposing sanctions on Iran .

Pro tip: Staying informed about international relations and nuclear non-proliferation treaties can help you understand the complexities of this situation.

Historical Context of US-Iran Relations

The relationship between the United States and Iran has been complex and often fraught with tension since the 1979 Iranian Revolution. The US supported the Shah of Iran, and the revolution led to the establishment of an Islamic Republic that opposed US influence in the region. The Iran-Iraq war in the 1980s further intricate the dynamics, and concerns about Iran’s nuclear program have been a major point of contention in recent decades .

Frequently Asked Questions

What are your thoughts on the recent US missile strikes in Iran? How do you see this situation unfolding in the coming weeks?

Share your opinions and analysis in the comments below!

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