Read Indonesia’s new budget plan for 2027, called the RAPBN, and one region keeps showing up. Not once. Not as a small note at the end. Again and again, in the numbers, the risks, and the partnerships. That region is the Middle East.

Most budget documents talk about growth targets and spending plans. This one does that too. But underneath those numbers sits a simple truth. What happens in the Middle East now shapes how much Indonesia pays for fuel, how strong the rupiah is, and how the government plans to borrow money next year.

In 2026, tension between Israel and Iran grew into open conflict. For a while, it looked like Iran might close the Strait of Hormuz, a narrow sea passage near Iran that carries about one fifth of the world’s oil. That fear alone was enough to send oil prices up sharply, at some points passing 100 dollars a barrel. On the supply side, OPEC and its partner producers raised output to calm the market, but the fear itself was already doing damage.

Indonesia felt this directly. The government had planned for its own oil price, called the Indonesian Crude Price, to sit between 75 and 85 dollars a barrel in the first half of 2026. Instead it landed at 90.46 dollars. That gap came almost entirely from the Middle East conflict, not from anything happening inside Indonesia.

To keep fuel and electricity affordable for ordinary people, the government had already spent 142.4 trillion rupiah on subsidies and another 151.2 trillion rupiah on energy compensation by the end of July 2026.........

© Middle East Monitor