Iran-Israel Conflict Drives Up World Oil Prices, Potential Believed Not As Bad As Ukraine War

JAKARTA, KOMPAS - Global oil prices have surged in recent days following the escalation of conflict between Iran and Israel. It is hoped that this conflict will not last long and will not have consequences as severe as the Russia-Ukraine war in 2022.

Nevertheless, if the escalation of tensions between the two countries continues, global oil prices could potentially return to the level of 100 US dollars per barrel. This surge in global oil prices may have a negative impact on Indonesia's trade balance.

Citing Trading Economics, the global oil price on Monday (16/6/2025) nearly reached 75 US dollars per barrel, the highest in the last six months. This price has increased by approximately 7 percent at the close of trading on Friday (13/6/2026).

The moment occurred after Israel launched a massive attack on gas fields in the Persian Peninsula, which resulted in the closure of gas production platforms. This was a follow-up attack after Israel targeted Iran's nuclear facilities and military bases last week.

Commodity observer Lukman Leong when contacted by Kompas, Monday, analyzed that oil prices were indeed affected by the escalation in the Middle East. Moreover, Iran is one of the world's major oil producers with a production of around 3.3 million barrels per day.

Nevertheless, he estimates that the conflict will not drive global oil prices above 80 US dollars per barrel. This upward price trend is believed not to last long.

"I estimate that OPEC+ (the alliance of oil-producing countries) will soon be able to offer an increase in production to the producing countries. From a logistical standpoint, Iran itself is still in negotiations with the United States (US) and is expected not to hastily close the Strait of Hormuz, which could place them in a worse diplomatic position," he said.

Meanwhile, Girta Putra Yoga, as the Research and Development representative of the Indonesia Commodity & Derivatives Exchange (ICDX), assessed that if the Iran-Israel war continues and supply is disrupted, the OPEC+ alliance will find it difficult to compensate. "This is due to Iran's substantial production, which can only potentially be offset by a significant increase in production from Saudi Arabia and the UAE," he stated when contacted separately.

He suspects that the effects of the Iran-Israel conflict on the distribution and price of global oil will not be as drastic as the effects of the Ukraine-Russia war in 2022. The Middle East is already known for its geopolitical turmoil, unlike the situation of the Ukraine war, which shocked the world with Russia's invasion.

"However, if Iran's war spreads, there is the potential for oil prices to soar even higher," he said.

If the increase in global oil prices continues, Indonesia's trade balance will be affected. This is especially true regarding oil imports that are not subsidized by the government. As is known, currently, Indonesia imports more crude oil and fuel oil than its domestic oil production, which is experiencing a deficit of up to 1 million barrels per day.

Similarly, Executive Director of the Center for Energy and Mining Law Studies (Pushep) Bisman Bakhtiar, assessed that the increase in oil prices due to the prolonged conflict will affect Indonesia. The effects will be seen from the cost of importing crude oil and fuel, both subsidized fuel or PSO (public service obligation) and non-PSO.

"The PSO fuel will certainly be a burden on the APBN and this will be quite burdensome in the midst of the country's financial condition which is not good. Meanwhile, the non-PSO has the potential for price increases that must be borne by the community," said Bakhtiar.

Regarding prices, he predicts that if the conflict does not escalate or is only short-term, the potential increase could be around 90 US dollars per barrel. "However, if the conflict escalates to the point of affecting Iran's oil production and distribution facilities, prices could rise to more than 100, even 120 US dollars per barrel," he stated.

Reflecting on the experience during the Ukraine-Russia war, when oil prices surged to around 100 US dollars per barrel in 2022, the domestic oil and gas trade balance experienced a significant increase in the export-import deficit.

Data from the Central Statistics Agency reports that the oil and gas trade balance throughout 2022 experienced a deficit of 24.39 billion US dollars, a significant increase from the oil and gas trade balance deficit in 2021, which was 13.25 billion US dollars.

Amidst the fluctuations in prices, the Director General of Oil and Gas at the Ministry of Energy and Mineral Resources (ESDM) who served in 2023, Tutuka Ariadji, stated that the supply of crude oil at that time was relatively secure because Indonesia primarily imports from Saudi Arabia and Nigeria, which are not directly involved in conflict countries.

Meanwhile, for fuel, Indonesia imports from Singapore and Malaysia. "Both countries are also not directly connected to conflict countries," said Tutuka, as quoted from a release by the Ministry of Energy and Mineral Resources, March 1, 2023.