Jakarta. The Indonesian rupiah could weaken beyond Rp 18,000 against the US dollar this month as rising oil prices and escalating geopolitical tensions continue to pressure emerging-market currencies, currency analyst Ibrahim Assuaibi said on Wednesday.

Earlier in the day, the rupiah fell to a fresh record low above Rp 17,600 per dollar, driven by surging crude oil prices and ongoing instability in the Middle East, according to Ibrahim.

He warned that the rupiah may continue to weaken in the near term if pressure from the stronger US dollar, elevated oil prices, and geopolitical tensions does not ease.

“There is a strong possibility that Rp 18,000 will be breached during trading this May,” Ibrahim said.

“The dollar is strengthening sharply today, while oil prices are also rising, and both are contributing to the rupiah’s weakness,” he added.

Oil prices climbed after US President Donald Trump claimed that China had agreed to purchase crude oil from the United States following his meeting with Chinese President Xi Jinping in Beijing.

The development added pressure on the rupiah because Indonesia remains heavily dependent on imported crude oil.

Ibrahim said higher oil prices were also being fueled by rising tensions in the Middle East, particularly after Iran conducted large-scale military exercises near the Strait of Hormuz, a critical route for global oil shipments.

Any disruption in the area could significantly affect global energy prices, he said.

Market uncertainty also intensified after an Indian cargo vessel traveling from Africa to the United Arab Emirates reportedly sank off the coast of Oman last Wednesday, raising concerns about the security of shipping and energy trade routes in the region.

Amid the mounting pressure, Ibrahim said Bank Indonesia should continue intervening in the foreign exchange market to maintain rupiah stability.

Beyond external pressures, he also highlighted Indonesia’s energy subsidy burden as another factor weighing on the currency.

According to Ibrahim, Indonesia’s large crude oil import requirements -- much of which are used to support subsidized fuel programs -- continue to increase demand for U.S. dollars.

“The large budget burden for subsidizing crude oil is one of the causes of the rupiah’s weakness,” he said.

He warned that pressures could intensify further if oil prices continue rising while Indonesia’s energy import dependence remains high.

“Out of the 1.5 million barrels of crude oil imported, around 85% is used for subsidized public fuel consumption,” Ibrahim said.

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