Indonesia can absorb the economic impact of rising global oil prices driven by tensions in the Middle East for up to 10 months without cutting fuel subsidies, a senior minister has said.
Airlangga Hartarto told foreign media on Monday that government support for diesel and other fuels would continue through to the end of 2026, with sufficient funds available to sustain the policy, News.az reports, citing Xinhua.
Global crude prices have climbed above 100 U.S. dollars per barrel since late February, following strikes on Iran by the United States and Israel, which disrupted shipping through the Strait of Hormuz.
Indonesia, which is a net oil importer, relies heavily on fuel subsidies to maintain economic stability, manage inflation and protect the purchasing power of lower-income households from volatility in global energy markets.
The country’s 2026 budget was based on an assumed oil price of 70 U.S. dollars per barrel. Officials say that each additional dollar increase adds around 6.8 billion Indonesian rupiahs, or roughly 506,000 U.S. dollars, to government spending.
Mr Hartarto also noted that Indonesia imports between 20% and 25% of its oil from the Middle East, and said efforts are under way to diversify supply sources to reduce exposure to regional instability.