Higher oil prices would mean bigger fuel subsidies, piling on the pressure on a budget that is already under investor scrutiny
A prolonged war could force policymakers into a difficult choice: maintain fuel subsidies and risk breaching the legal deficit ceiling – potentially unsettling investors further – or cut funding to keep the budget within limits but fuel inflation instead.
The conflict has disrupted tanker traffic in the Strait of Hormuz – a key shipping route for Gulf energy exports – pushing Brent crude prices to about US$85 per barrel on Friday, near its highest price since 2024.
The government has already allocated 210.1 trillion rupiah (US$12.4 billion) for energy subsidies this year, a 14.5 per cent increase from last year’s budget.
Source: News - South China Morning Post
