Arcandra Tahar: Israel-Iran War Triggers Global Oil Price Surge

TEMPO.CO, Jakarta - Tensions in the Middle East have once again rocked the global energy market. On June 13, 2025, Israel struck Iran, triggering a sharp jump in global oil prices. Crude rose to US$75 per barrel, the highest level recorded so far this year.

According to former Minister of Energy and Mineral Resources Arcandra Tahar, the price spike is driven by how oil-producing countries in the region perceive the geopolitical risks surrounding the conflict between Israel and Iran.

According to Arcandra, the geopolitical factor shapes market perception in times of political uncertainty. In his view, price shocks like this cannot be understood solely through the lens of supply and demand.

"This spike is not simply about supply and demand," Arcandra wrote in a post on Sunday, June 22, 2025. Tempo was given permission to quote the statement.

"Before President Trump announced the tariff hike, the global supply of crude oil was slightly above demand. To stabilize prices, OPEC+ had already planned to cut supply to keep oil within the US$75 to US$80 per barrel range through the end of 2025,” Arcandra said.

However, before OPEC+ could carry out its plan, Trump's surprise announcement caught the market off guard. Even though supply and demand remained unchanged, prices still fell. "What triggered the price shock was traders' perception that economic growth would slow and lower demand. That is what caused crude oil prices to drop,” he said.

For this reason, Arcandra said that market perception has become the main cause of energy price fluctuations. In the case of the Israel-Iran conflict, for example, traders are bracing for possible disruptions to Iran's oil supply. Iran currently produces around 3.3 million barrels of oil per day and exports approximately 2 million barrels daily.

Arcandra also reminded that Iran has the world's eighth-largest oil reserves and the fourth-largest natural gas reserves. He said that a conflict in this region could seriously undermine global energy stability. "If Iran's oil and gas infrastructure is disrupted, roughly three percent of the world's oil supply could be affected. That is not a small number," he said.

He added that the risk of a shutdown of the Strait of Hormuz could trigger even more serious price shocks. The narrow passageway handles approximately 20 percent of the world's oil and LNG exports. If that route were blocked, prices could spike dramatically. "If the Strait of Hormuz closes, imagine the consequences. Some are predicting that oil prices could surpass US$90 per barrel," Arcandra said.

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