Indonesia will raise its energy subsidy budget in the 2026 state budget to absorb rising global crude benchmarks and prevent domestic fuel prices from climbing, Minister of Energy and Mineral Resources Bahlil Lahadalia announced on 11 September.
Protecting purchasing power
“President Prabowo takes the view that defending and maintaining the purchasing power of the lower-middle class is far more important, even with various measures we must take, such as increasing the subsidy budget, which I think is part of the steps we take,” Lahadalia said in Jakarta.
Lahadalia added that the decision was driven by erratic international crude benchmarks. Subsidized fuel prices remain unchanged.
Global crude pressure
Brent crude traded up 0.5 percent at $108.13 a barrel at 08:18 Singapore time on 11 September, bringing its weekly gain to 13 percent and year-to-date advance to 80 percent, after reaching a wartime high of $126 a barrel in April. West Texas Intermediate gained 0.6 percent to $103.05 a barrel.
Director General of Oil and Gas Laode Sulaeman cited tensions in the Strait of Hormuz and Red Sea regions, alongside refinery attacks, as primary supply concerns, while the Russia-Ukraine war, sanctions, and projected declines in US oil reserves also impacted prices.
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Indonesian crude prices
The official Indonesian Crude Price averaged between $85 and $90 a barrel from January to August. August ICP climbed $7.75, or 9.5 percent, from $81.68 in July to $89.43 a barrel under ministerial decree number 352.K/MG.03/MEM.M/2026. September ICP is projected between $83.00 and $87.00 a barrel.
Related: Indonesia won't raise fuel prices despite quota overrun risk · Indonesia raises August crude price to $89.43 a barrel
