Sri Mulyani Remains Aware Of The Potential Increase In World Oil Prices Due To The Iran-Israeli Conflict

Minister of Finance Sri Mulyani (Photo: Antara)

Minister of Finance Sri Mulyani Indrawati said that she continues to be aware of the potential increase in global oil and gas prices due to geopolitical conflicts in the Middle East which will affect the State Revenue and Expenditure Budget (APBN) and economic conditions so that it has the potential to boost inflation.

"We still need to be aware of the possibility of border distraction from supply chains, especially for oil and gas. Because the conditions there (Iran and Israel) are still very hot, and the tendency for high oil prices means it will affect both our state budget and our economy, also causing pressure and inflation," Sri Mulyani said at the KITA State Budget Press Conference, Friday, April 26.

According to Sri Mulyani, the current geopolitical tension has not decreased and tends to increase due to the heated conflict between Iran and Israel, this will pose a risk to the global economy.

Sri Mulyani said that geopolitical tensions were one of the main discussions at the Spring Meeting of the 2024 International Monetary Fund-World Bank Group (2024 IMF-WBG Spring Meetings) in Washington DC, United States on April 15-20.

"The world geopolitically has not decreased in tension or tends to increase and this creates a risk of spill over to the world economy," he said.

In addition, Sri Mulyani conveyed that various countries at the meeting hoped that geopolitical tensions would not escalate and the two countries tried to avoid war openly.

Sri Mulyani said that there is a potential for geopolitical conflicts to decline, but the government will remain vigilant, against the possibility that global oil prices will soar.

Sri Mulyani explained that the price of brant oil had penetrated 90 US dollars per barrel but was corrected again and in April 2024 the price of bran oil was recorded at 88 US dollars per barrel. Meanwhile, the price of bran oil increased 14.3 percent year to date (ytd) or from January to April 2024.

"So there is indeed a tendency to slow down the increase in oil prices in 1 year or between January 2024 and March and even April. And this cannot be denied because there is pressure from geopoliticals in the Middle East," he said.

Then, Sri Mulyani said the WTI oil price was recorded at 84.2 US dollars per barrel in April 2024. Although the price was slightly lower than Brent, the WTI oil price price price was equally high, which was 17.5 percent from January to April 2024.