Israeli Attack on Tehran Worsens Economic Uncertainty

JAKARTA, KOMPAS — The global economy is increasingly shrouded in uncertainty following the Israeli attack on Tehran, Iran. The military strike immediately resulted in soaring global oil prices, a collapse of Asian stock markets, a weakening of several currencies, and the potential for spillover effects on the global economic condition.

Referring to Market Insider data, world oil prices have soared above 8 percent on Friday (6/13/2025) morning. As a comparison, previously, on Thursday (6/12/2025), the price movement had plateaued and closed in the range of 69 US dollars per barrel.

The price of West Texas Intermediate (WTI) crude oil recorded an increase of 10.17 percent, reaching 75.84 US dollars per barrel, approaching Friday noon WIB. At the same time, the price of Brent crude oil rose by 9.51 percent, reaching 77.03 US dollars per barrel.

At one point, the movement of world oil prices even soared above 12 percent. WTI was recorded to have touched its highest point at 77.62 US dollars per barrel in intraday trading and Brent oil had touched its highest point at 78.5 US dollars per barrel.

As reported by Reuters, Israel's military attack on Iran has raised concerns about disruptions to oil supplies from the Middle East region as the center of world oil production.

A senior market analyst from Phillip Nova, Priyanka Sachdeva, stated that the possibility of a retaliatory attack from Iran on Israel is further escalating tensions in the Middle East. This rising tension will increasingly disrupt the movement of oil prices.

"Iran has declared a state of emergency and is preparing a counter-attack plan. This increases the risk, not only in the region but also to other oil-producing countries," he told Reuters.

As world oil prices soared, Asian stock markets also plunged at the opening of trading on Friday morning. Investors began to flock to instruments considered safe (safe haven) such as gold and the Swiss franc.

In Indonesia, the Composite Stock Price Index (IHSG) opened in the red at the level of 7,176 in Friday morning trading, declining by 28.19 points or 0.39 percent after previously closing at the level of 7,204.37 in Thursday's trading. So far, the stocks have moved within the range of 7,160.87 to 7,192.66.

The regional Asian stock markets also experienced a uniform decline in trading on Friday morning. The Nikkei 225 index (Japan) recorded a drop of 438.4 points to a level of 37,736, the SSE index (Shanghai) weakened by 24.64 points to a level of 3,378, and the Hang Seng index (Hong Kong) fell by 168.52 points to a level of 23,866.

As stock exchanges in various countries weakened, as reported by Reuters, the price of gold jumped 1.5 percent to US$3,434 per ounce, approaching its highest record since April 2025 of US$3,500 per ounce.

The US dollar also showed strengthening against other currencies. The US Dollar Index (DXY), which measures the strength of the dollar against a number of world currencies, indicated that the dollar strengthened by 0.48 percent to a level of 98.305 on Friday. In the previous closing, on Thursday, the DXY had plummeted to a level of 97.836, or the lowest level since April 2022.

Along with the strengthening of the US dollar, the rupiah was recorded to have weakened in trading on Friday morning. At the opening of trading, the rupiah weakened by 36.5 points or 0.22 percent to the level of Rp 16,279 per US dollar. Previously, at the close of trading on Thursday, the rupiah had briefly strengthened to the level of Rp 16,237 per US dollar in line with the weakening of the US dollar.

Before the attack on Iran occurred, JP Morgan had released a report titled "Oil Markets Weekly Note," which contained estimates regarding the impact of tensions in the Middle East on the global market.

While concluding that global oil prices are likely to remain around $60 per barrel throughout 2025, the report also estimates a worst-case scenario in the event of a military attack on Iran due to the deadlock in nuclear negotiations.

JP Morgan estimates that if tensions escalate, global oil prices could soar to reach 120 US dollars per barrel. With rising oil prices, there is potential for an increase in consumer inflation (CPI) in the United States, which could ultimately also impact the interest rate policies of the US central bank, The Federal Reserve.

Previously, The Fed had shown signs of lowering its benchmark interest rate, providing a glimmer of hope for many developing countries such as Indonesia. However, this latest development has the potential to exacerbate global economic uncertainty.

"An attack on Iran could push oil prices to 120 US dollars, which would then increase the US CPI inflation to 5 percent, and reopen the possibility of an interest rate hike by The Fed," the report stated.

The Head of Global Commodity Research at JP Morgan, Natasha Kaneva, estimates that global oil prices could rise further if tensions in the Middle East escalate and Iran closes the Strait of Hormuz. Approximately one-fifth of global oil trade passes through this strait.

"In the worst-case scenario, if nuclear negotiations fail, we estimate that global oil prices could surge to levels of 120-130 US dollars per barrel," he said.