How the Hormuz reopening could lower fuel prices in Indonesia

The middle class makes up most of the people who buy non-subsidized fuel like Pertamax.

Jakarta (ANTARA) - The atmosphere inside the Presidential Palace Complex on Thursday (June 18) shifted from routine statecraft to cautious optimism.

While President Prabowo Subianto briefed the directors and commissioners of Indonesia's state-owned banks, reporters ignored normal financial news.

Instead, they asked economic ministers about one major global development: the sudden peace agreement reached between the US and Iran.

Hours earlier, US President Donald Trump and Iranian President Masoud Pezeshkian signed a historic memorandum of understanding online.

The most immediate result of this deal is the reopening of the Strait of Hormuz. This narrow shipping route connects the Persian Gulf to the Gulf of Oman and carries one-fifth of the world’s oil supply.

With the official signing ceremony scheduled to happen this Friday in Switzerland, global energy markets are preparing for a major return of oil supplies.

The development could ease pressure on Indonesia, which has faced elevated energy costs in recent months. In other words, for Indonesian, which has suffered from months of soaring energy costs, this news brings great relief.

However, government officials are asking the public to be patient. They warn that it will take time for this international breakthrough to actually translate into cheaper fuel at local gas stations.

Speaking to the press, Coordinating Minister for Economic Affairs Airlangga Hartarto confirmed that the reopening of the strait will heavily weigh on upcoming fuel price adjustments, particularly for non-subsidized brands like Pertamax.

However, he emphasized that the government is in "wait-and-see" mode.

The impact of the agreement will not be immediately felt, Airlangga cautioned, noting that the government must first monitor the implementation of the deal and the actual stabilization of global oil distribution.

This careful approach from the government is due to how the oil market works. The prices of non-subsidized fuels depend on strict market formulas tied to global oil prices, not on government decisions.

In theory, if global oil prices keep falling, local fuel prices will eventually go down too. The real problem is how long that will take.

Energy and Mineral Resources (ESDM) Ministry calculates the Indonesian Crude Price (ICP) using a monthly average. Because of this, the price drops from reopening the Strait of Hormuz will not show up immediately; they will only be reflected in next month's official price.

This delay will likely last longer than just one month. Experts estimate it could take four to eight weeks for oil prices to fully steady, even after the shipping route officially opens.

Several things are slowing down this return to normal. Shipping companies are still dealing with long lines of oil tankers, low oil supplies, and very high insurance costs left over from when the route was closed.

On top of that, the Indonesian government knows that Middle Eastern peace can be fragile. What was signed on Thursday was just a preliminary agreement, not a final fix for the region's problems—and the US is known for making sudden, unexpected policy changes.

Related news: Indonesia monitors US-Iran peace deal impact on fuel prices

Fiscal room

The impact of the oil crisis went beyond gas prices—it also hurt the government’s finances.

In the 2026 State Budget, the government planned for oil to cost just $70 a barrel. But when the US-Israel-Iran war started in March and the shipping route closed, oil prices jumped way past that plan, hitting $102.26 in March and $117.31 in April.

The government had to use extra state money to cover these high costs by paying for bigger fuel subsidies and more expensive oil imports. Now that global oil prices have dropped back down to around $80, those extra costs are turning into savings.

As Indonesia needs to import about 1.6 million barrels of oil every day, every single dollar that oil prices drop saves the country a lot of money. These improvements are already beginning to be seen in other areas of the economy.

The Jakarta Composite Index (JCI) returned above 6,000, and the rupiah strengthened below Rp18,000 per US dollar.

The government’s budget is no longer under so much pressure, which gives officials more flexibility to spend money on other important needs.

The impact extends beyond the government's balance sheet.

The middle class makes up most of the people who buy non-subsidized fuel like Pertamax. If Pertamax prices drop along with global oil prices, it will give middle-class families more spending power again after months of tight budgets.

Simultaneously, the aviation sector is preparing for a soft landing. Airline ticket prices skyrocketed in April after a massive surge in aviation fuel prices, driven by Middle Eastern turmoil.

The significant rise in global aviation fuel prices is a major driver of rising airfares.

If global oil prices start falling now that the Strait of Hormuz is open, plane fuel will get cheaper. This means airlines could lower or remove their "fuel surcharges"—the extra fees they added to the normal ticket price to cover their high fuel costs.

Related news: Indonesian govt defends Pertamaxprice hike as fiscal safeguard

Diversification

While reopening the Strait of Hormuz gives immediate relief to the economy, Indonesia is making sure it never gets caught off guard again. The months of closure were a sharp warning: when one major trade bottleneck is blocked, the whole country's economy suffers.

To protect its long-term energy needs, the government is focusing on buying oil from different countries.

Under Presidential Regulation No. 26 of 2026 concerning petroleum procurement for national energy security, Indonesia will stick to its plan to import 150 million barrels of oil from Russia through the end of the year.

This diversification strategy comes from lessons learned during the Hormuz crisis. When one main shipping route gets blocked, it disrupts the whole supply chain, proving that relying on only one source is not enough.

In the end, the breakthrough in the Strait of Hormuz has given Indonesia a chance to recover its economy from the global crisis. The government has also hinted that lower gas station prices are coming.

How fast that actually happens now depends entirely on whether the new peace deal turns into real, safe shipping on the open seas, how quickly the global oil market gets back to normal and if oil prices keep falling over the next few weeks.

Related news: Purbaya says premium fuel hike to have 'minimal' inflation impact

Translator: Aditya Ramadhan, Yashinta Difa

Editor: M Razi Rahman

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