Iran war brings fuel risk to Indonesia ahead of Eid travel surge
Indonesia is region's biggest oil products importer, sourcing much of its supply from areas now disrupted by the conflict
JAKARTA, Indonesia (MNTV) – Indonesia is grappling with spiking regional fuel prices caused by the Persian Gulf conflict just as more than 100 million Indonesians prepare to travel home for Eid Al-Fitr — one of the largest temporary migrations anywhere in the world.
The end of Ramadan triggers a massive homecoming known as mudik, with close to half the population hitting the road, airlines adding flights and families cooking large traditional meals on gas stoves, all of which drive up fuel consumption.
Between March 12 and the end of the month, petrol consumption is expected to rise 12% above normal levels, according to the energy ministry, with aviation fuel and kerosene also climbing.
As South-east Asia’s largest economy and the region’s biggest importer of oil products, Indonesia sources much of its supply from areas now disrupted by the conflict.
Fuel stockpiles in nearby Singapore are above average, but Indonesia’s own reserves are among the lowest in the region, leaving little room to handle prolonged disruption.
Stocks of liquefied petroleum gas, used in cooking and industrial processes, stand at 12 to 15 days.
The government has largely sought to reassure consumers that the country is well-supplied and prices will not rise, but analysts warn it may be underestimating the crisis.
“The government is asking the public to remain calm without presenting concrete solutions,” said Bhima Yudhistira Adhinegara, executive director of the Center of Economic and Law Studies.
“This is highly risky, especially ahead of Eid, when consumption typically rises.” In a Cabinet meeting Friday, President Prabowo Subianto called on ministers to outline cost-cutting and fuel consumption measures in the coming days, without providing details.
The energy crunch arrives at a difficult moment. President Prabowo has already faced market turmoil, a tumbling currency and civil unrest. Before the Iran war, the government expected to spend nearly 381 trillion rupiah ($28.9 billion) on subsidies — about 10% of its budget. If oil prices remain near $100 per barrel, that figure will grow further.
Finance Minister Purbaya Yudhi Sadewa has warned that Indonesia would breach its 3% legal deficit ceiling if its crude benchmark averages above $92 this year.
The fuel price sensitivity is deeply rooted. Indonesia has long capped petrol prices as a national entitlement, and attempts to raise them have historically triggered protests and riots, most recently in 2022 during the Russia-Ukraine oil spike. For vendors like Imansyah, a roadside chicken seller who relies on subsidized LPG cylinders costing around $1 each, even a $0.70 price rise would destroy his margins. “I hope the government will not raise prices,” he said.
“Hopefully they understand the condition of our country.”
Indonesia was once a major oil exporter and an early OPEC member, with production peaking at just under 1.7 million barrels a day in 1977. Output has since fallen to just over 600,000 barrels a day as existing fields ran dry and foreign investment declined. The country became a net crude importer in 2003.
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