Iran-Israel Conflict Risks Disrupting Global Energy Supplies, Raising Prices

The escalating Iran-Israel conflict has led to a significant surge in crude oil prices, raising concerns about energy subsidies and economic stability worldwide. Indonesia faces increasing pressure on its state budget due to subsidized fuel prices, with experts warning that oil prices surpassing $100 per barrel could drastically increase subsidy burdens and weaken the rupiah. Globally, the conflict threatens major fuel shipping routes such as the Strait of Hormuz, critical for a third of global seaborne oil and a fifth of LNG shipments, causing insurance costs to rise and some tankers to avoid the route. In Australia, experts warn that cooperation in US airstrikes on Iran, including potential use of the Pine Gap surveillance base, risks making the country a target for retaliation, while Australian government officials remain cautious in their comments. Additionally, an American energy analyst criticized Australia's net zero policies as economically damaging, citing the country's rich natural resources and advocating for a shift toward nuclear and natural gas energy to enhance energy security. These developments highlight the intertwined geopolitical and economic challenges posed by the Middle East tensions and their ripple effects on global energy markets and national policies.