CORE Economist: Iran-Israel Conflict Potentially Disrupts World Crude Oil

Illustration. (Photo: Doc. Antara)

JAKARTA - Indonesian Center of Reform on Economics (CORE) economic researcher Yusuf R Manilet said the Iran and Israeli conflict has the potential to disrupt crude oil supply so that it can cause a surge in world crude oil prices.

"The main concern is the disruption of oil supply, which can cause a spike in oil prices because the Strait of Hormuz is a vital trade route for oil exports. This can have an impact on the global economy, including Indonesia, which relies heavily on oil imports," Yusuf said, quoted from Antara, Wednesday, April 17.

In the past week, the movement of the value of oil prices was in the range of 85 US dollars per barrel. This condition is relatively above macro assumptions for oil prices set by the Indonesian government which are in the range of 82 US dollars per barrel.

If sentiment or conflict between Iran and Israel lasts for a long period, then a period of high oil prices will occur because Iran is one of the global oil producers.

This is a concern for countries and oil importers such as Indonesia where under certain conditions policy adjustments, especially fiscal policies, need to be carried out to respond to the increase in oil prices.

Previously, Coordinating Minister for Economic Affairs Airlangga Hartarto emphasized that the government would not increase the price of fuel oil (BBM) until at least June 2024, although the Iran-Israeli conflict has the potential to disrupt supply and increase world oil prices.

"Until June (the price of fuel) has not increased, the government has stated it," said Airlangga Hartarto in a press conference after the halalbihalal event at the office of the Coordinating Ministry for Economic Affairs in Jakarta.

The government continues to monitor developments in the Iran-Israeli conflict and considers various possible policy scenarios, one of which is the adjustment of fuel subsidies that require calculation and re-alignment of the budget.

However, the government has not made a decision regarding this matter. He said that the government did not want to overreact to the current increase in global geopolitical tension.