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View all search resultsFiscal fears grow as high oil price strains state budget
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Birds fly as smoke rises following an explosion, after Israel and the United States launched strikes on Iran, in Tehran on March 3, 2026. (Reuters/Majid Asgaripour/WANA )
T
he United States-Israeli attack on Iran has sent global oil prices surging past US$80 per barrel, putting additional strain on the state budget, which could force painful adjustments.
Brent crude oil exceeded $85 on Tuesday, marking the highest level since June 2024, and far surpassing the $70-per-barrel assumption in the 2026 state budget.
Analysts expect the figure to remain elevated over the coming days and possibly hit $100 per barrel, which would put immense pressure on the budget.
Putra Adhiguna, managing editor at the Energy Shift Institute (ESI), estimates that every $1 increase in global oil prices would drive up the state’s fuel subsidies bill by Rp 7 trillion ($414 million).
This means a $30 increase, if maintained for the fiscal year, would inflate the fiscal burden by approximately Rp 210 trillion, he told The Jakarta Post on Tuesday.
Given oil supply risks from the Middle East amid the ongoing conflict in the region, the government is set to procure more crude from the US.
Energy and Mineral Resources Minister Bahlil Lahadalia announced the procurement shift as a “precautionary measure”, noting that Indonesia only bought 20 to 25 percent of its total crude oil imports from the Middle East.
