Jakarta. The Indonesian Chamber of Commerce and Industry (Kadin) has raised concerns over the growing economic risks stemming from escalating military tensions between Iran and the United States and Israel, warning of significant disruptions to global trade routes and rising costs for businesses.

The conflict, which also involves Israel’s backing of the United States, has destabilized key shipping lanes in the Middle East, particularly in the Gulf region, according to Kadin officials.

Mohamad Bawazeer, head of Kadin’s Saudi Arabia Bilateral Committee, said the heightened tensions have triggered a sharp surge in ocean freight rates.

“The impact of this conflict has disrupted economic activity, with base shipping rates rising by nearly threefold,” Bawazeer said in Jakarta on Saturday.

Shipping companies are increasingly adopting a cautious stance as security risks mount. Many vessels are now avoiding the Bab el-Mandeb Strait in the Red Sea and instead rerouting around the Cape of Good Hope in Africa to reach the Suez Canal.

The shift has significantly extended delivery times. Shipments that would normally take between 15 and 20 days to reach ports such as Dammam or Jeddah are now taking up to two months, Bawazeer said.

At the same time, thousands of containers have reportedly been held up at Jebel Ali Port as access through the Strait of Hormuz faces tighter restrictions imposed by local authorities.

“This situation is severely disrupting business activities in Saudi Arabia, both for finished goods and industrial raw materials, which will inevitably lead to higher prices,” he added.

Risks to Indonesia’s Manufacturing Sector

Trade Minister Budi Santoso echoed the concerns, warning that prolonged tensions could weigh on the country’s trade performance, particularly if global oil distribution is disrupted.

The risks would intensify significantly if the Strait of Hormuz — a critical artery for global energy supplies — were to be fully closed.

Indonesia’s manufacturing sector is among the most vulnerable to such shocks. Rising energy prices would increase factory operating costs, squeezing profit margins or forcing producers to raise prices.

This, in turn, could weaken the competitiveness of Indonesian exports amid already fragile global demand, creating a dual pressure of higher production costs and softer markets.

The Middle East hosts two of the world’s most strategic maritime chokepoints: the Strait of Hormuz and the Bab el-Mandeb Strait.

Roughly 20% of global oil consumption passes through the Strait of Hormuz each day, linking energy producers in the Persian Gulf to international markets. Meanwhile, Bab el-Mandeb serves as a key gateway to the Suez Canal, a vital shortcut for trade between Asia and Europe.

The escalation involving the United States and Iran in February 2026 has raised security risks for commercial shipping in both corridors. Any disruption to these routes could send shockwaves through global supply chains.

Longer detours via southern Africa not only add thousands of miles to shipping routes but also sharply increase fuel consumption and insurance costs.

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