Indonesia energy security faces geopolitical and supply risks

Energy experts and officials are warning that Indonesia must strengthen its energy supply resilience to mitigate the impact of global geopolitical dynamics, particularly in the Middle East. Dr. Anas Alhajji, an energy economics expert, noted that international price fluctuations can increase costs for fuel, household LPG, transportation, and industrial needs.

Alhajji also highlighted risks from environmental factors, such as droughts and declining river levels, which could disrupt production. Specifically, the production of palm oil-based biodiesel feedstock may face pressure if raw material supplies are interrupted. Additionally, the rising demand for liquefied natural gas (LNG) driven by artificial intelligence and data center expansion is expected to increase price competition and procurement costs for Asian nations.

Luthfi Ridho, a senior expert from the National Energy Council, emphasized the importance of monitoring crude oil prices and crack spreads. He noted that maintaining subsidized fuel prices creates a fiscal dilemma for the government, as rising procurement costs increase the national budget burden. Ridho warned that failing to anticipate supply chain pressures could lead to fuel shortages, which would further impact the economy and public purchasing power.