Global Trade at Risk Amid Threat of Bab-el-Mandeb Strait Closure

March 30, 2026 | 05:27 pm

TEMPO.CO, Jakarta - Executive Director of the Center of Economics and Law Studies (Celios) Bhima Yudhistira believes that closing the Bab-el-Mandeb Strait would pose a greater threat to global trade than closing the Strait of Hormuz.

According to him, 12 percent of the world's trade passes through this route, as it is the fastest route from Asia to Europe and Africa. "12 percent of world trade passes through the Bab-el-Mandeb Strait because it is the fastest route," he said in a written statement on Monday, March 30, 2026.

After the Strait of Hormuz, Iran is said to be considering closing another vital trade route, the Bab-el-Mandeb Strait. This strait separates the Asian continent from Africa and connects the Red Sea with the Indian Ocean.

Bhima recalls that, during the 2023–2024 period, disruptions in the Bab-el-Mandeb Strait increased sailing time by up to 15 days. This situation made it difficult for cargo ships to obtain insurance and increased logistics costs for import and export activities.

He views this situation as something to be cautious of, as by January 2026, Indonesia's exports to Europe had reached 13.4 percent of the total exports.

Bhima projects that world oil prices could surpass US$120 per barrel if the Strait of Hormuz is closed. The impact is that imported inflationary pressure through food and energy channels will be felt by society more quickly.

In addition, the raw materials for fertilizer that also pass through that route are potentially disrupted, ultimately putting pressure on agricultural producers. Bhima believes this condition could depress the exchange rate of the rupiah due to weak export performance caused by increased import costs.

Bhima suggests that the government should take mitigation measures immediately. First, lobbying the governments of Yemen and Iran so that cargo ships carrying Indonesian goods are not hindered. Second, expedite the reallocation of funds for energy and fertilizer subsidies.

He estimates that the additional government spending could reach Rp515 trillion, assuming that each US$1 increase in oil prices above the state budget revenue and expenditure (APBN) assumptions adds a burden of Rp10.3 trillion in spending.

Third, he believes that the government should increase subsidies for public transportation to reduce fuel consumption.

Fourth, accelerate the energy transition, particularly in the electricity sector, by installing solar panels, micro-hydro systems, and wind turbines. In rural areas that still rely on solar for generators, Bhima advocates for a transition to alternative energy sources.

Read: Trump Claims Iran Allows 20 Oil Tankers Pass Through Strait of Hormuz

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