Jakarta.  Surging global oil prices driven by escalating tensions involving the US, Israel, and Iran are delivering a double-edged impact on Indonesia’s economy, pushing up inflation risks while boosting export commodity gains, Bank Indonesia said.

Senior Deputy Governor Destry Damayanti said the shock stems from disruptions around the Strait of Hormuz, a critical global energy trade route, amplifying both cost pressures and export gains.

“The impact cuts both ways, oil prices are rising, but export commodity prices are also increasing,” Destry said at the Central Banking Forum 2026 in Central Jakarta on Monday.

On the downside, higher oil prices are expected to fuel inflation and increase energy costs, with spillovers quickly felt across global financial markets. A stronger US dollar reflects mounting uncertainty.

“As a result, everything is rising, oil prices are above $100, and regional currencies, including those in advanced economies, are weakening,” she said.

However, BI noted that Indonesia is also benefiting from the rally in global commodity prices. Key exports such as coal, crude palm oil (CPO), and gold have all strengthened in tandem with energy prices.

“Coal is rising as countries prepare alternative energy sources. CPO is up. The indirect impact is quite positive for Indonesia, given coal, CPO, and gold,” Destry said.

The commodity upswing is expected to support Indonesia’s export performance, providing a buffer against higher energy import costs.

At the same time, disruptions in the Strait of Hormuz are pushing up global logistics costs. Trade bottlenecks in the Middle East are affecting international shipping routes and driving up freight expenses.

“This is increasing shipping costs and logistics, creating disruptions in the global supply chain,” she said.

BI warned that supply chain disruptions will likely push up prices across a wide range of global commodities, from metals and energy to industrial raw materials, while also risking a slowdown in global production.

“In summary, global commodity prices are rising, gold, coal, nickel, and agricultural products are all up. Recently, plastics have also been affected due to supply chain issues, ultimately leading to lower production,” Destry added.

Overall, BI sees the impact of the conflict transmitting through three main channels: financial markets, commodity prices, and trade and production. The biggest risk is a stagflation scenario, slowing global growth combined with rising inflation.

For Indonesia, this presents a complex challenge. While higher oil prices threaten domestic price stability, stronger export commodity prices offer a partial cushion.

“This is what we call stagflation, it’s not good. Policy response will be crucial,” Destry said.