Israel's attack on Iran triggered a surge in oil and gold prices, weakening the rupiah.

JAKARTA, KOMPAS — Israel's sudden attack on Tehran, which triggered a massive explosion on Saturday (28/2/2026), has exacerbated geopolitical tensions in the Middle East and led to a surge in global oil, financial, and gold prices.

As reported by Kompas.id, Israel has launched an attack on Iran. Israeli media outlet Jerusalem Post reported that the Israeli Military (IDF) launched an attack on Iran on Saturday (February 28, 2026). Along with the attack, Israel sent a warning to all citizens.

In Tehran, an explosion was heard, followed by a column of dust and smoke. The location of the explosion was reportedly close to Tehran University. Iranian media outlet Irna reported that explosions were heard in at least two locations in Tehran.

American media outlet CNN reported that Israel coordinated with the US in this attack. CNN sources and the Associated Press reported that the US was involved in the attack. The attack was described as large-scale.

An economist and international trade expert from the Faculty of Economics and Business at the University of Indonesia (FEB UI), Fithra Faisal Hastiadi, stated that the escalation of the conflict is considered to have the potential to widen and disrupt global energy and financial markets.

The deployment of two aircraft carriers signals a serious warning, although it falls short of full-scale war, which is typically characterized by the deployment of three to four aircraft carriers. However, the line between a limited conflict and open war is considered very thin.

He estimates that the conflict could last for up to two weeks. "If it lasts more than a week to two weeks, the impact on the Strait of Hormuz will be significant," he said.

The Strait of Hormuz is a route for approximately 20 percent of the world's oil trade. Disruptions in distribution in that region have the potential to drive up global crude oil prices.

At the close of trading on Friday (27/2/2026), the price of Brent crude oil surged by 2.45 percent or increased by 1.73 USD to 72.48 USD per barrel. Meanwhile, West Texas Intermediate (WTI) strengthened by 2.78 percent or rose by 1.81 USD to a level of 67.02 USD per barrel.

According to Fithra, in the worst-case scenario, if the conflict persists for more than two weeks, oil prices could breach the psychological barrier of 100 US dollars per barrel, and may even approach 120 US dollars per barrel.

"Because it directly impacts the Strait of Hormuz. That's a key factor," he said.

Yield Dynamics and Safe Haven

On the global financial side, Fithra highlighted the correlation between the United States' geopolitical and geoeconomic policies and the movement of the yield on 10-year US government bonds (UST 10-year yield).

He cited the example of last April, when the tariff policy was announced, when the stock market corrected, but demand for US bonds increased because they were considered a safe haven asset. This increased demand temporarily depressed yields.

Currently, the 10-year US Treasury yield is below 4 percent, reflecting strong demand for bonds. However, if global risks escalate sharply, capital flows could potentially shift from US bonds to other hedge assets, such as gold and the Japanese yen.

Fithra predicts that if risk pressures increase in the coming days, the US Government is likely to seek to ease tensions through diplomatic channels in order to avoid further turmoil in the financial markets.

For Indonesia, the direct impact primarily stems from the potential surge in global oil prices. As a net oil-importing country, rising energy prices can widen the current account deficit and put pressure on the exchange rate.

In the short term, according to Fithra, the pressure on the rupiah is relatively limited due to the weakening of the US dollar index and the decline in US Treasury yields. This condition theoretically reduces external pressure on the currencies of emerging markets.

However, if the conflict lasts more than three days and develops into a global risk-off sentiment, capital flows could leave emerging markets.

"If it lasts more than two weeks, the rupiah could reach 17,200 per US dollar in the worst-case scenario due to a flight to safety," he said.

He added that the start of next week coincides with the MSCI index rebalancing, which could potentially increase stock market volatility. However, some foreign capital inflows are expected to shift to the domestic bond market, potentially curbing pressure on the rupiah in the very short term.

"We must prepare for the worst-case scenario, especially if global oil prices truly exceed 100 US dollars per barrel," said Fithra.

Economic, currency, and commodity observer Ibrahim Assuaibi said that geopolitical uncertainty is the main catalyst for strengthening gold prices as a safe haven asset.

On Saturday (28/2/2026) morning, the world gold market closed at US$5,280 per troy ounce, while the domestic price of gold bullion (precious metal) reached Rp. 3,085,000 per gram.

"Even if there is a correction, the decline will be slight, likely to US$5,260 per troy ounce. Precious metals could be around Rp3,045,000 per gram," Ibrahim said on Saturday.

In a weekly correction scenario, global gold prices are expected to fall to around US$5,200 per troy ounce, with the price of the precious metal around Rp3,000,000 per gram. However, he said, the chances of strengthening next week are greater.

He estimates the first resistance level for global gold is US$5,365 per troy ounce, with the price of the precious metal potentially reaching Rp3,150,000 per gram. In fact, within the next week, the global gold price could reach US$5,500 per troy ounce, and the precious metal price could reach Rp3,400,000 per gram.

The increase in global gold prices and precious metals is closely related to geopolitical issues. Ibrahim assesses that the failure of the meeting between delegations from the United States and Iran in Geneva, Switzerland, has worsened the situation. The meeting did not yield the expected agreement, particularly concerning the issues of nuclear reactors and Iran's missile development.

Tensions escalated following Israel's attack on Tehran. The situation has become increasingly complex with conflicts in other regions, such as Afghanistan and Pakistan, as well as the potential involvement of allied countries for each party, including the United States backing Israel and China and Russia, which have historically supported Iran.

In addition to driving up gold prices, the escalation of conflict has the potential to raise global crude oil prices. The increase in energy prices is considered to have a cascading effect on global inflation and weaken the currencies of developing countries, including the rupiah.

"This could mark a new chapter in the conflict in the Middle East in March 2026. As a result, it is highly likely that gold prices will rise, precious metals will increase, and the rupiah will weaken. Furthermore, if crude oil prices rise, this will have an impact on its derivatives," he stated.

Trade war and Fed policy

Another factor supporting gold prices is the uncertainty surrounding the trade war in the United States. The U.S. Supreme Court had previously declared the import tariff policy implemented by President Donald Trump's administration illegal due to the use of emergency laws. However, the tariff policy continues to be enforced, and even increased from 10 percent to 15 percent.

According to Ibrahim, the dynamics of domestic politics in the United States also contribute to global uncertainty. Countries that have signed trade memorandums of understanding (MoUs) with the United States may need to make adjustments to their domestic policies.

From a monetary perspective, several Federal Reserve officials have signaled the possibility of interest rate cuts up to two times this year, especially after the fourth quarter economic growth did not meet expectations. Generally, interest rate cuts enhance the appeal of gold as they reduce the yields of dollar-based instruments.

On the other hand, the trend of diversifying foreign exchange reserves by several central banks into gold, along with projections of supply limitations from global mining companies, also supports positive sentiment for precious metal prices in the medium term.

Rupiah at risk of weakening

The external pressure is considered to have the potential to weaken the rupiah. Ibrahim estimates that the exchange rate of the rupiah may depreciate significantly next week and has the potential to reach the level of Rp 17,000 per US dollar.

The pressure on the rupiah does not only stem from geopolitical conflicts but also from the impacts of trade wars, including the imposition of high tariffs on several Indonesian products.

"Bank Indonesia needs to intervene and implement strict monetary oversight to anticipate greater volatility," Ibrahim said.

He emphasized that the combination of geopolitical tensions, trade wars, U.S. interest rate policies, and the dynamics of global gold supply and demand makes next week a crucial period for the financial markets.

The Head of the Macroeconomics and Finance Center of Indef, M Rizal Taufikurahman, stated that the value of bilateral trade between Indonesia and Iran is relatively small, approximately 200 million US dollars per year. This figure is considered insufficient to significantly impact Indonesia's exports.

According to him, what needs to be watched out for is not the trade channel, but the oil channel. Although Indonesia is not dependent on Iran as a market, Iran does influence global oil prices.

Iran is an oil-producing member of OPEC and is located in the strategic region of the Strait of Hormuz, a major energy distribution route in the world. Any increase in tensions in the Strait of Hormuz will directly raise the risks of global oil prices.

"The trade aspect, its impact on Indonesia arises through energy prices, then to inflation, followed by the rupiah, and continues to the financial market, not through bilateral exports-imports," said Rizal.

Indonesia, as a net importer of oil and gas, will be impacted by rising energy import costs, increasing the need for compensation and subsidies, and narrowing the government's fiscal space.

Inflationary pressure and the rupiah

From a monetary perspective, rising crude oil prices risk triggering imported inflation, or inflation from abroad, through increases in fuel, transportation, and food logistics costs. Under these circumstances, Bank Indonesia is expected to prioritize exchange rate stability over interest rate cuts.

As global markets enter a risk-off phase, capital flows tend to shift to safe-haven assets such as the US dollar and US Treasury bonds. This movement has the potential to put pressure on the rupiah and narrow the scope for domestic interest rate cuts.

"The consequence is that transmission to the real sector occurs through a slowdown in credit and investment," he said.

Meanwhile, the financial sector is impacted through financing channels. Geopolitical uncertainty increases market volatility, raises yields on government securities (SBN), and increases the cost of government and corporate debt.

"If prolonged conflict and high oil prices persist, the simultaneous pressure on fiscal policy, the rupiah, and the costs of economic financing could pose a more serious macroeconomic risk than the direct impacts of trade," said Rizal.