DARI LAPANGAN PASAR GLOBAL—BAGAIMANA SITUASI TIMUR TENGAH MENGUBAH EKONOMI DUNIA?

FROM THE BATTLEFIELD TO GLOBAL MARKETS—HOW THE MIDDLE EAST SITUATION IS CHANGING THE WORLD ECONOMY?

When Iran launched missiles at the United Arab Emirates' oil port in early May 2026, what caught fire wasn't just oil storage facilities. What burned was the assumption that global supply chains would keep running normally. That energy prices would remain under control. That a war in a distant land wouldn't reach our wallets.

Those assumptions are now history.

The Middle East conflict has transformed the global economy on a scale perhaps unseen since the 1970s oil crisis. Not just oil prices. But fertilizer prices, industrial metals, logistics costs, and even global investor confidence. And Indonesia, as a country still importing 50 percent of its fuel needs, cannot escape.

📊 SECTION 1: THE ENERGY SHOCK—OIL PRICES AND THE FAILED "PROJECT FREEDOM"

The World Bank, in its Commodity Markets Outlook report released on April 28, 2026, warned that the Middle East war is expected to trigger the largest energy price surge in four years .

World Bank projections:

Scenario Brent Oil Price Global Inflation Impact

Baseline Scenario (disruption ends May, gradual recovery) US$86 per barrel +0.4% from initial forecast

Severe Scenario (additional damage to facilities) US$115 per barrel +0.9% from initial forecast

Source: World Bank Commodity Markets Outlook, April 2026

IMF Managing Director Kristalina Georgieva added an even starker warning: if the war continues until 2027 and oil prices reach around US$125 per barrel, the global economy could face "much worse out comes" .

The impact is already being felt. On May 4, 2026, Brent crude oil prices surged 5.8 percent in a single day, breaking through US$114.44 per barrel . The trigger wasn't just the blockade, but a major escalation: President Trump launched a new mission called "Project Freedom" to open shipping lanes in the Strait of Hormuz using the U.S. Navy .

"The move initially appeared to backfire," Reuters wrote. "There was no surge in commercial vessel traffic, while Iran showed force."

Iran rejected U.S. claims that American commercial vessels had successfully transited the strait. Iranian authorities released a map of sea areas they now claim are under their control—expanded far beyond the Strait of Hormuz to include long stretches of coastline belonging to the United Arab Emirates .

The untold lesson: "Project Freedom" actually exposed U.S. limitations. Even with superior military power, Washington cannot unilaterally open the strait. Iran still controls access, and costs and risks remain high. This is not a victory. This is an acknowledgment that a new status quo has been established.

Beyond oil, the global gas market (LNG) has also been shaken. Global LNG exports fell sharply in April 2026 to their lowest level in nearly two years . Qatar, the world's second-largest LNG exporter, halted production following attacks on its main facilities . As a result, supplies to Asia and Europe were disrupted. Fortunately, the United States is beginning to play an increasingly important role. The Golden Pass LNG terminal in Texas shipped its first cargo on April 22, 2026 .

Here's the irony of the global energy market: as Qatar burns, the U.S. fills the void.

🏭 SECTION 2: THE INDUSTRIAL SHOCK—ASEAN MANUFACTURING CONTRACTS

The Middle East disruption doesn't stop at energy prices. It spreads to the industrial sector—and the impact is already being felt across ASEAN.

S&P Global data for April 2026 shows that of the five ASEAN countries that have released Manufacturing PMI data, only three remain in expansion territory, while Indonesia and the Philippines have entered contraction .

ASEAN Manufacturing PMI Performance (April 2026):

Country April PMI March PMI Change Status

Malaysia 51.6 50.7 +0.9 Expansion

Myanmar 50.9 51.5 -0.6 Expansion (slowing)

Vietnam 50.5 51.2 -0.7 Expansion (slowing)

Indonesia 49.1 50.1 -1.0 Contraction

Philippines 48.3 51.3 -3.0 Contraction

*Source: S&P Global PMI, April 2026 *

The Philippines was hit hardest, with its PMI plunging to the lowest level in ASEAN. New order declines were the deepest since August 2021 .

In Indonesia, manufacturing PMI fell to 49.1—the first contraction in nine months. Output fell at the fastest pace since May 2025 . S&P Global noted that input costs rose to their highest level since April 2022, due to rising global energy prices, shipping costs, and imported raw material prices .

As a result, Indonesian manufacturing output prices rose at the fastest pace in 12.5 years . This means that prices of everyday consumer goods will rise in the near future.

Germany's automotive industry is also in turmoil. The Ifo Institute survey showed German automotive business sentiment plunged to minus 30.7 from minus 15.3 in March 2026 . The cause: shortages of critical inputs like helium, used in chip manufacturing, airbags, metal processing, and battery leak detection. Qatar supplies about 40 percent of the European Union's helium, and its flow has been disrupted by the closure of the Strait of Hormuz .

A troubling sign: More than 9 percent of companies reported shortages of critical inputs in April, up from only about 1 percent in March. This  that supply chain disruptions will not recover quickly .

🔩 SECTION 3: THE METALS SHOCK—ALUMINUM, COPPER, TIN HEADING FOR RECORDS

The Strait of Hormuz conflict is also shaking up global metals markets.

Aluminum prices surged to their second-highest level on record, approaching peaks last seen during the 2022 Russia-Ukraine war . Causes:

· The conflict is hampering aluminum eksport from the Middle East, which supplies about 7 percent of global supply

· Military strikes have destroyed or damaged smelters responsible for roughly 3 percent of global production capacity

· Major smelters in the UAE and Iran are expected to take up to a year or more to return to full operation

Global aluminum inventories are currently at very tight levels, sufficient for only a few days of demand . This is not a temporary shortage. This is a structural crisis expected to push the aluminum market into a deficit in 2026 and possibly extend into 2027 .

Prices of copper, tin, and other base metals are also forecast to hit record highs, driven by strong demand from data center industries, electric vehicles, and renewable energy .

However, there is a glimmer of hope for the long term: Even under pressure, the market is expected to recover and move toward a surplus starting in 2028, as new projects come online, especially in India and Indonesia, and as disrupted production capacities recover .

Lesson: Industrial self-sufficiency doesn't happen over night. But the on going smelter projects in Indonesia could be long-term strategic investments—if they don't get abandoned amid the crisis.

🌾 SECTION 4: THE FOOD SHOCK—FERTILIZER AND THE GLOBAL FOOD CRISIS

The most alarming supply chain impact may not be on industry, but on FOOD.

The World Bank estimates that fertilizer prices will surge 31 percent in 2026, driven by a 60 percent jump in urea prices . As a result, farmer access to fertilizer will fall to its worst level since 2022, eroding farmers' incomes and threatening future harvests .

If the conflict drags on, the World Food Program (WFP) estimates that up to 45 million more people could fall into acute food insecurity this year .

World Bank Chief Economist Indermit Gill summarized this cascade of effects starkly:

"The war is hitting the global economy in cumulative waves: first through higher energy prices, then higher food prices, and ultimately, higher inflation, which will push interest rates higher and make debt more expensive."

"The poorest people, who spend most of their income on food and fuel, will be hit hardest, as will developing countries already struggling under heavy debt burdens."

In Indonesia, the threat is already emerging. The conflict is disrupting not only energy supplies but also other vital commodities, with reports suggesting that around 30-50 percent of national pharmaceutical raw materials could run out within six months if the conflict drags on. A fertilizer and food crisis is the next threat.

💰 SECTION 5: THE GLOBAL ECONOMIC COST—$1 TRILLION AND RISING INEQUALITY

An analysis by the climate campaign organization 350.org of IMF data revealed a staggering financial impact. The burden of oil and gas prices will reach at least US$600 billion** even if the Strait of Hormuz returns to normal operation soon. If supply disruptions continue, the impact is projected to **surge past US$1 trillion .

This figure is considered a conservative estimate as it does not yet include knock-on effects such as rising global inflation, surging fertilizer and food prices, an overall decline in economic activity, and potential mass layoffs across various sectors .

A bitter irony: While households and governments worldwide struggle with soaring living costs, giant oil companies are reaping extraordinary profits from high fuel prices. Energy giant BP reported that their first-quarter trading profits more than doubled .

Anne Jellema, Executive Director of 350.org, said these profits were made "on the suffering of millions of people who are now struggling to afford electricity and food" .

Developing countries are hit hardest. The Marshall Islands, for example, declared a 90-day state of emergency and was forced to close government offices early each day to save energy .

In Africa, the situation is far more worrying. Malawi's Deputy Minister of Natural Resources stated that soaring fuel prices were forcing the government to consider cutting education budgets just to meet foreign debt payments . Meanwhile, Ghana warned of a risk of anarchy and mass protests if the crisis continues for more than six months .

Calls for a windfall tax on excess oil company profits are growing louder. The funds raised could be allocated to social protection for the most vulnerable, massive investment in cheaper and cleaner renewable energy, and debt reduction for developing countries to give them fiscal space for the energy transition .

🇮🇩 SECTION 6: INDONESIA IN THE STORM—FROM PMI TO THE RUPIAH

Indonesia cannot escape this storm. As an energy-importing country (about 50 percent of its fuel needs are imported), Indonesia is one of the most vulnerable.

Pressure Point #1: Manufacturing PMI Contraction

Indonesia's manufacturing PMI fell to 49.1 in April 2026—the first contraction in nine months . The decline was driven by:

· Rising raw material prices due to supply disruptions from the Middle East

· Higher energy costs burdening production expenses

· Weakening demand as consumers start tightening belts amid uncertainty

Pressure Point #2: Rupiah Plunges

On May 4, 2026, the rupiah touched Rp17,360 per US dollar, approaching its weakest level on record . Since the war began in late February, the rupiah has weakened more than 2.5 percent .

This rupiah weakening is driven by:

1. Capital outflow from emerging markets to safe havens (US dollar, gold, US bonds)

2. Increased need for foreign exchange for more expensive energy imports

3. Global uncertainty keeping foreign investors in wait-and-see mode

Pressure Point #3: Subsidies Balloon, State Budget Under Pressure

When global oil prices rise, Indonesia's energy subsidy burden swells. The government faces a classic dilemma: raise fuel prices (risking inflation and social unrest) or maintain subsidies (risking a budget deficit). Either way, the people pay—either through higher prices or through cuts in development spending.

Indonesia's Areas of Strength:

Despite the enormous pressure, Indonesia has strategic assets that many developing countries lack:

· Fertilizer production surplus so it doesn't face supply disruption risks in the near term

· Coal reserves as an alternative energy source (albeit dirty)

· Smelter projects coming online (aluminum, nickel) that will boost domestic production capacity

🔮 SECTION 7: CONCLUSION—THREE WAVES AND TWO CHOICES

``

> [SYSTEM OBSERVATION]

>

> The Middle East war has transformed the global economy on a scale

> perhaps unseen since the 1970s oil crisis.

>

> Wave One (Energy): ALREADY HAPPENING.

> Oil prices breached US$114 per barrel, LNG is scarce,

> and the U.S.'s "Project Freedom" failed to open the Strait of Hormuz.

>

> Wave Two (Industry): UNFOLDING NOW.

> Indonesia's manufacturing PMI contracted (49.1).

> The Philippines (48.3) is the worst in ASEAN.

> Germany's auto industry is choking on helium shortages.

> Production costs are rising, selling prices are soaring.

>

> Wave Three (Food): THE NEXT THREAT.

> Fertilizer prices up 31 percent. Farmers are under pressure.

> 45 million people threatened with starvation.

>

> Indonesia cannot escape. PMI is down. The Rupiah is weakening.

> Subsidies are ballooning. The budget deficit is widening.

>

> But Indonesia also has assets: a fertilizer surplus (for now),

> coal reserves, and smelters coming online.

>

> Two paths for our industrial evolution:

>

> | Option | Fast Track (Optimal) | Slow Track (Risky) |

> |---|---|---|

> | Manufacturing | Invest in high technology, diversify export markets | Remain dependent on imported raw materials and traditional markets |

> | Downstream Processing | Smelters fully operational by 2027-2028, stable aluminum supply | Projects delayed due to high costs and uncertainty |

> | Energy | Accelerate renewable energy transition, reduce fuel import dependence | Remain dependent on imported crude oil, budget vulnerable |

> | Food | Strengthen domestic fertilizer production, diversify sources | Continue importing fertilizer, vulnerable to global shocks |

>

> The question isn't "will this crisis end?"

> But "will Indonesia continue to be a passive passenger in the global storm—

> or start building resilience so it doesn't fall when the next wave comes?"

>

> [END_TRANSMISSION]