What Will Indonesia Do If Oil Prices Surge Next Year?

September 9, 2026 | 10:09 pm

TEMPO.CO, Jakarta - Indonesia's Finance Minister Purbaya Yudhi Sadewa said the government will take measures to ensure budget sustainability if global oil prices surge in 2027 amid global geopolitical uncertainty.

The minister made this statement when asked about what the government would do if geopolitical escalation continues into next year and oil prices are sent into another frenzy. 

"We will surely take steps to ensure our budget remains sustainable, as it was this year," Purbaya said at the Ministry of Finance in Jakarta on Wednesday, September 9, 2026, as quoted by Antara.

The government, he said, has experience dealing with pressures triggered by fluctuating oil prices. "So we won't be too surprised," he said.

Purbaya stopped short of specifying the fiscal policies that would be implemented if global oil prices in 2027 rise beyond the government's assumptions.

In the 2027 State Budget Bill, the government assumed an Indonesian Crude Price (ICP) of US$75 per barrel and a rupiah exchange rate of Rp17,500 per US dollar. With this exchange rate, the ICP is equivalent to approximately Rp1.31 million per barrel.

This ICP assumption is higher than the 2026 State Budget, which set an Indonesian crude oil price of US$70 per barrel with an exchange rate of Rp16,500 per US dollar, or approximately Rp1.16 million per barrel.

The government also plans higher energy subsidies in the 2027 State Budget Bill, at Rp272.95 trillion, as compared to the 2026 outlook of Rp227.3 trillion.

The Ministry of Energy and Mineral Resources previously explained that energy subsidies are influenced by several variables, including global oil prices, the ICP, the rupiah exchange rate, and subsidized energy quotas.

The ministry's secretary general, Ahmad Erani Yustika, stated that changes in the ICP assumptions and exchange rates could affect the size of energy subsidy requirements.

Read: Indonesia Boosts 2027 Budget Target by Rp9.1 Trillion

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