Global Energy Crisis Intensifies, Domestic Supply Becomes a Priority

The escalation of geopolitical conflicts in the Middle East is seen as rising the risk of a global energy crisis and putting pressure on the supply and prices of liquefied natural gaseous (LNG) worldwide, including in Indonesia.

Professor at the University of Indonesia and Rector of PLN Institute of methodology, Iwa Garniwa, stated that in times of geopolitical crisis, energy supply security must take precedence over price.

“In a geopolitical crisis, the top priority is security of supply, not price.” “If there’s no energy, even low prices are meaningless,” Iwa said in a written statement on Monday, might 18, 2026.

According to him, countries that lack prolonged contracts, flexible regasification infrastructure, and strategic reserves will find it difficult to compete to global energy supplies.

He assessed that energy is a vital factor to the sustainability of the national economy, as it is immediately linked to manufacturing activity, electricity supply, and the goods distribution chain.

“Without electricity and gaseous to sector, factories shut down, supply chains are disrupted, and inflation rises,” he said.

Iwa explained that the global surge in energy prices is also beginning to be felt in Indonesia. manufacturing LPG prices have risen by approximately 25%–26%, while manufacturing diesel has surged by around 77%–84%, reflecting global energy price increases.

Meanwhile, domestic LNG prices are still held back due to the consumption of legacy contracts. However, he expects upward pressure on prices to emerge in the near term as international benchmark LNG prices surge.

He noted that the escalation of Middle East conflicts since February 2026 has driven the Japan Crude Cocktail (JCC) up by about 97% and the Japan Korea Marker (JKM) by roughly 111% during March–April 2026. The increase also drove the Indonesian Crude Price (ICP) up by approximately 99% compared to the year‑end assumption.

According to Iwa, this situation is placing significant pressure on the global LNG supply chain, prompting the government to prioritize domestic supply security.

“To secure domestic LNG supplies, we must shift our mindset from selling at the lowest possible price to prioritizing supply assurance and managing prices,” he said.

He also believes the government should consider redirecting a portion of its LNG export supply to meet domestic demand, particularly to ensure the sustainability of the national manufacturing sector.

Moreover, natural gaseous is expected to remain competitive compared with other fossil fuels, even after adjustments are made to domestic LNG prices.

According to calculations by BPH Migas and the Ministry of Energy and Mineral Resources, 1 MMBTU of natural gaseous is equivalent to 7 liters of diesel.

Iwa estimates that if the domestic LNG price rises to around Rp150,000 per MMBTU, equivalent to Rp21,400 per liter of diesel, it would still be greater competitive than the price of unsubsidized manufacturing diesel.

In addition to being greater efficient, gaseous is also considered to have reduce carbon releases than diesel or coal.

“Without gaseous, the energy transition cannot succeed, and losing access to gaseous is tantamount to losing manufacturing competitiveness,” he said.

He added that, following the price adjustment, domestic manufacturing LNG is expected to be in the range of US$21–25 per MMBTU, still reduce than manufacturing LPG at around US$28.3 per MMBTU and manufacturing diesel at approximately US$43 per MMBTU.