The escalation of conflict between Iran and Israel has once again raised global concerns due to its potential to trigger geopolitical instability and disrupt the world economy. Tensions have intensified following reports that Iran has closed the Strait of Hormuz, a strategic waterway that has long served as a main artery for global oil distribution. Disruptions to this global energy trade route have raised concerns about rising oil prices and their impact on the international economy.
The issue was discussed during the Pojok Bulaksumur (Bulaksumur Corner Discussion) titled “The Impact of the Middle East War on Diplomatic Relations, the Threat of Global Recession, and Energy Scarcity,” held on Thursday (Mar. 5) at the Central Building of Universitas Gadjah Mada (UGM).
Professor Siti Mutiah Setyawati, a professor at the UGM Faculty of Social and Political Sciences (Fisipol UGM), explained that the conflict between Iran and the United States has deep historical roots that continue to shape tensions today.
According to her, relations between the two countries have gone through several phases of conflict since the Iranian Revolution in 1979, which was followed by the severance of diplomatic relations with Western countries. Professor Setyawati said that Iran’s political and ideological dynamics have continually strained its relationship with the United States. The situation has been further aggravated by narratives portraying Iran as a threat to international security.
“Since the Iranian Revolution in 1979, relations between Iran and the United States have remained tense, and various political narratives have shaped global perceptions of Iran,” she said.
She also highlighted Indonesia’s decision to join the United States-initiated Board of Peace. According to her, although the forum claims to promote peace in Gaza, there are fundamental issues with its membership composition. She explained that Palestine is not included in the structure of a forum that claims to seek a resolution to the conflict in the region. Professor Setyawati also noted that Indonesia’s participation could create a perception of partiality in the Middle East conflict.
“A mediator in a conflict must remain neutral. When Indonesia joins the Board of Peace, whose members include the United States and Israel, it will be difficult for other parties such as Iran to accept Indonesia as a mediator,” she said.
From a global economic perspective, Dr. Yudhistira Hendra Permana, a lecturer in the Department of Economics and Business at the UGM Vocational College (SV UGM), explained that the escalation of the Iran-Israel conflict carries significant implications for international economic stability. Yudhistira said that rising oil prices caused by geopolitical tensions could trigger inflationary pressures in many countries.
According to him, energy remains a crucial production factor, meaning that higher oil prices will increase production costs. This situation may lead to cost-push inflation affecting various economic sectors.
“Rising energy prices will drive cost-push inflation because energy remains a primary production factor in many sectors,” he said.
Yudhistira added that the impact of geopolitical turbulence will be more strongly felt in countries with a high degree of economic openness. He noted that Indonesia is a small open economy that heavily depends on global economic dynamics. He explained that reliance on energy imports and trade relations with major economies make the national economy vulnerable to external shocks. In addition to inflation, pressures may also emerge on the rupiah exchange rate and trade stability.
“Indonesia is a small open economy that relies heavily on global economic conditions, so geopolitical turbulence like this will quickly affect inflation and the exchange rate,” he said.
Meanwhile, Dr. Rachmawan Budiarto from the UGM Center for Energy Studies highlighted the potential impact of the conflict on energy security. He explained that the closure of the Strait of Hormuz poses risks to global energy supplies because the strait carries a large share of the world’s oil.
According to him, the situation has already affected energy shipping activities in the region. Rachmawan said that hundreds of oil tankers have had to wait due to uncertain security conditions.
“When the Strait of Hormuz is disrupted, hundreds of tanker ships must wait, and this immediately creates risks to global energy availability,” he said.
According to Rachmawan, the situation serves as an important reminder for Indonesia to strengthen its national energy security. He explained that reliance on energy imports makes Indonesia vulnerable to disruptions in global supply. In the short term, diversifying energy sources and increasing strategic reserves are important steps to reduce such risks. He also emphasized the importance of accelerating the development of alternative energy to strengthen national energy independence.
“Entrusting our energy supply to other countries is like placing our neck in someone else’s hands,” he stressed.
Author: Triya Andriyani
Post-editor: Rajendra Arya
Photo: Donnie