Jakarta. Indonesia's Finance Minister Purbaya Yudhi Sadewa warned on Wednesday that a prolonged rise in global oil prices driven by escalating tensions in the Middle East could narrow the government's fiscal room to support the economy through additional stimulus measures.

Purbaya said higher crude prices would increase pressure on the state budget, forcing the government to be more cautious in managing spending while limiting its ability to roll out growth-boosting policies.

"I am concerned that if oil prices rise too high, my fiscal space to provide stimulus will become limited, aside from fuel subsidies," Purbaya told reporters in Jakarta.

Global oil prices climbed about 2% on Tuesday to their highest levels in five weeks amid concerns that tensions involving the United States and Iran could disrupt global energy supplies. Brent crude settled at $91.01 per barrel, while US West Texas Intermediate (WTI) crude closed at $84.91 per barrel.

Market concerns have also intensified over threats by Yemen's Houthi group to blockade shipping routes linked to Saudi Arabia, raising fears of disruptions to oil exports.

Purbaya said the government had stress-tested the 2026 state budget using an oil price scenario of $100 per barrel. As a result, if crude prices were to decline to around $70 per barrel—the assumption used for Indonesia's 2026 budget based on the Indonesian Crude Price (ICP)—the government would have additional fiscal room to finance economic stimulus.

"When I say I hope oil prices fall to $70, it is because the budget had previously been calculated using an oil price of $100. That means we would have extra funds that could be used to support economic growth," he said.

He said any additional fiscal space would be directed toward measures aimed at accelerating economic activity. However, persistently high oil prices would reduce the funds available for such policies.

"Now the available funds may become smaller, so we have to be more careful. But the fundamentals of our economy remain well maintained," Purbaya said.

Indonesia's state budget recorded a deficit of Rp 196.5 trillion ($11 billion), equivalent to 0.76% of gross domestic product, in the first half of 2026.

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