Strait of Hormuz: A Critical Chokepoint in the Global Energy System

Indonesia Eximbank Institute assesses that the Middle East region plays a strategic role in the global energy system, contributing more than 30 percent of the world's oil production and with about 20-30 percent of global oil trade passing through the Strait of Hormuz.

“Reporter Mutia Yuantisya March 22, 2026 | 01:31 pm TEMPO”

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Rini Satriani, the Head of the Institute, stated that disruptions in this region can quickly affect international energy prices and increase the logistics costs of global trade, in an official statement quoted on Saturday, March 21, 2026.

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Although Indonesia's oil imports do not directly come from the Middle East, the impact can still be felt through regional trade routes.

About 75 percent of Indonesia's oil imports come from Singapore and Malaysia, which import crude oil from the Middle East, so supply disruptions in this region can drive up energy prices faced by Indonesia.

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The Institute also observes the impact of changes in global energy distribution on major oil-importing countries in the Middle East, such as China, Japan, India, and South Korea, which are the main energy consumers from the Gulf region and important export markets for Indonesia.

Increased energy costs could suppress industrial activities in these countries and affect demand for Indonesian export products.

If geopolitical tensions persist for a relatively long period, the average price of world oil in 2026 is estimated to range from US$85 to US$120 per barrel, higher than the early-year average of around US$60 per barrel.

“Reporter Mutia Yuantisya March 22, 2026 | 01:31 pm TEMPO”

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The increase in energy prices and logistics costs could raise production costs in various global industrial sectors, with the effect likely to be more pronounced for Indonesian exporters in sectors that depend heavily on imported raw materials, such as manufacturing, petrochemicals, and basic metals.

Increased input costs can erode production margins in such conditions, especially if global demand slows.

Volatility in global financial markets can also exert pressure on the exchange rates of emerging market countries, including Indonesia, and weakening exchange rates can increase the cost of importing raw materials for domestic industries, putting additional cost pressure on export-oriented sectors.

Amidst various risks, the prices of some Indonesian export commodities have risen alongside the increase in global energy prices.

Coal contributes around 8-9 percent to the national total exports and has the potential to increase in price.

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Meanwhile, the price of crude palm oil (CPO) has shown a relatively strong trend, as the global demand for agricultural commodities remains solid.

Amidst the previous interest rate declines, several commodities made from local raw materials have also helped reduce production costs, creating opportunities to increase the competitiveness of Indonesian export products in the global market.

According to Rini, an increase in energy and agricultural commodity prices could support Indonesia's export performance in the short term.

However, volatility in metal commodities and industrial sectors still needs to be anticipated, especially if a more profound global economic slowdown occurs.

Taking into account commodity price dynamics and global trade conditions, Indonesia's exports are expected to grow by 4-5 percent in 2026, with the potential to increase to 5-6 percent in 2027, provided that global demand gradually recovers and geopolitical tensions ease.