Indonesia Diversifies Oil Sources as Strait of Hormuz Disrupted

TEMPO.CO, Jakarta - Coordinating Minister for Economic Affairs Airlangga Hartarto said the tensions caused by the US and Israeli war on Iran have disrupted the global oil supply chain, prompting the Indonesian government to prepare mitigatory measures, including diversifying supplies. 

The closure of the Strait of Hormuz, a vital oil and gas trade route, is the primary factor in supply disruption. "The Strait of Hormuz is disrupted, and so is the Red Sea. So we'll see how far this battle will go," Airlangga said at his office on Monday, March 2, 2025.

Indonesia, according to the minister, has already signed multiple memorandums of understanding (MoU) to gain supplies outside of the Gulf region. This measure is part of the efforts to mitigate the impact of the tension following the US and Israeli attack on Iran. 

"For example, Pertamina has made MoUs with several American companies, including Chevron, Exxon, and others," he said.

Indonesia is committed to importing oil and gas from the United States worth US$15 billion, as outlined under the trade pact signed last month. The Indonesian government also monitors other countries as import sources. 

Besides disruption to oil supplies, the conflict in the Gulf also affected logistics shipping and the tourism sector. Indonesia also faces a possible surge in domestic fuel prices. "Just like during the war in Ukraine But this time, the supplies from the US will also increase, and the Organization of the Petroleum Exporting Countries (OPEC) will also bolster its capacity," he said.

Based on historical data, crude oil prices briefly exceeded US$100 per barrel in 2022 during the Russian invasion of Ukraine. As of Monday afternoon, March 2, 2025, Brent crude oil was observed at US$79 per barrel, up from the Saturday closing at US$72.8 per barrel. Citing Trading Economics data, WTI crude oil futures contracts were at $72.3 per barrel, up from the previous $67.2 per barrel.

Read: Indonesia's Export-Import Flows with Hormuz Strait Nations Explained

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