TEMPO.CO, Jakarta - Global crude oil prices surged early this week following escalating tensions between Iran and Israel in the Middle East. According to Trading Economics data on Monday, March 9, 2026, West Texas Intermediate (WTI) crude futures jumped to $115 per barrel, after earlier intra-day trading saw a 31% increase.
The one-day surge marked the largest single-day gain since April 2020 and pushed oil prices to their highest level since June 2022, extending last week’s rally of 35.6%.
Supply Disruptions in the Middle East
The spike was driven by a series of supply disruptions from major producers in the Middle East, particularly after energy shipping lanes in the Strait of Hormuz, a critical route for global oil, were disrupted. Any disturbance in this strategic passage has an immediate impact on global supply balance.
In Iraq, production from three major southern oil fields reportedly fell sharply, dropping roughly 70% to 1.3 million barrels per day, down from 4.3 million barrels per day before the outbreak of conflict. The decline directly tightened global supply.
Other Gulf producers have also been affected. Kuwait, the fifth-largest OPEC oil producer, began cutting output last Saturday and declared a force majeure. Qatar followed suit last week by reducing liquefied natural gas (LNG) production.
Analysts also warned of potential output declines from the United Arab Emirates and Saudi Arabia, citing storage capacity limits that constrain additional production.
Impact on Global Markets
The surge in energy prices has reignited concerns about global inflation and prompted a risk-off sentiment in financial markets. Andry Armoro, Chief Economist at Bank Mandiri, noted that investors are reassessing expectations for monetary policy easing by major central banks, including the U.S. Federal Reserve.
“Markets currently expect U.S. interest rate cuts only in July and October 2026,” he said in a statement on Monday.
Market participants are also awaiting U.S. inflation data this week. The Personal Consumption Expenditures (PCE) price index for January 2026 is projected to rise to 2.9% year-on-year, while core inflation is expected to increase to 2.5% from 2.4%.
Implications for Indonesia’s Fiscal Policy
In Indonesia, Finance Minister Purbaya Yudhi Sadewa said the government had previously modeled scenarios assuming average global oil prices at $92 per barrel for the year. Under such conditions, the state budget deficit (APBN) could widen to more than 3% of GDP.
“If prices average $92 per barrel for a year, the deficit could reach about 3.6%,” Purbaya said on Friday, March 6, 2026, in Jakarta.
Despite potential widening, he said the deficit could be managed through efficiency measures in government spending. In normal conditions, he noted, global oil prices hover around $60 per barrel. The government has also prepared scenarios for prices rising to $72 per barrel, which would still be considered fiscally safe.
Indonesia has previously faced oil prices exceeding $150 per barrel. At that time, the economy slowed but did not trigger a crisis. Purbaya added that if oil prices spike too high, the government could consider raising subsidized fuel prices, though no such plans have been discussed yet.
“For now, our budget remains secure,” he said.
Anastasya Lavenia Yudi contributed to the writing of this article.
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