Jakarta – Coordinating Minister for Economic Affairs Airlangga Hartarto has given a strong signal regarding the possibility of revising the energy subsidy budget this year, which was triggered by the potential impact of the conflict in the Middle East.
Iran’s missile attack on Israel last week has increased tensions in the region, affecting the global crude oil price volatility.
“Brent oil prices have strengthened 4.78% to USD 89.42 per barrel as of yesterday afternoon, and WTI crude oil rose 4.34% to USD 84.56 per barrel,” Airlangga said in an official statement on Tuesday, April 16.
Airlangga emphasized the importance of controlling the situation in the Middle East, given its potential impact on the global economy. He also explained that the government needs to pay attention to three things related to the war: the global benchmark interest rate policy, world oil prices, and the increase in logistics costs and interest rates on government securities.
“Of course, we hope that this year we can maintain economic growth, inflation and interest rates,” he said.
Meanwhile, Minister of Energy and Mineral Resources Arifin Tasrif has also said that the government will find it difficult to prevent a surge in energy subsidies, especially if the conflict in the Middle East heats up further.
If the tension continues, it could impact the surge in oil and fuel prices in the country, which in turn could impact the swelling of fuel subsidies and compensation.
“Not to mention that if the price of oil rises per 1 dollar, the subsidy and compensation for fuel can increase by around Rp 3.5 trillion – Rp 4 trillion. That’s why we must save energy, and energy efficiency must continue to be planned and programmed,” he said.
The overall statement highlights the importance of the government’s quick reaction in anticipating the economic impact of tensions in the Middle East, including the possibility of revising the energy subsidy budget as a strategic step in dealing with oil price volatility and rising energy costs in the country. (Hartatik)
