From Hormuz to households: How geopolitics is repricing Indonesia’s cooking oil

The escalating military confrontation in the Middle East, pitting the United States and Israel against Iran, has become a transmission belt, channeling external shocks directly into Indonesia’s domestic economy. Nowhere is this more evident than in the price of cooking oil, one of the country’s most politically sensitive commodities. The potential closure of the Strait of Hormuz, through which roughly one-fifth of global oil supply flows, has created the most severe energy disruption since the 1970s. For Indonesia, the world’s largest producer of crude palm oil (CPO), this crisis exposes a striking paradox. Rising global crude prices, projected to hover between $100 and $120 per barrel, are lifting CPO prices through substitution effects in biodiesel markets. As fossil fuel costs […]