Oil Market Turbulence and Geopolitical Tensions: Why the IHSG is Bracing for a Volatile Session

The Indonesia Stock Exchange (IDX) started Tuesday's trading session on a cautious note, as the Jakarta Composite Index (IHSG) showed signs of significant volatility. Investors are currently navigating a complex landscape dominated by soaring global crude oil prices and escalating geopolitical tensions in the Middle East. At the opening bell, the IHSG edged down by 3.38 points or 0.05 percent to the 6,968.57 level, while the LQ45 index—representing the top 45 blue-chip stocks—slipped by 0.80 points or 0.12 percent to 673.76.

The Strait of Hormuz Conflict and Global Energy Security

According to Liza Camelia Suryanata, Head of Research at Kiwoom Sekuritas Indonesia, the primary driver for today's market sentiment is the worsening situation in the Strait of Hormuz. Iran has reportedly ramped up attacks on maritime vessels and energy infrastructure, including a significant fire reported at a United Arab Emirates (UAE) oil port. This escalation has put the global energy supply chain on high alert.

In response to these threats, the United States has launched "Project Freedom," a military initiative designed to keep vital shipping lanes open. This operation is no small feat, involving approximately 15,000 military personnel and over 100 aircraft. However, the situation remains a powderkeg; Tehran has issued stern warnings that any foreign military forces entering the strait will be met with force. This renewed friction comes after a brief four-week ceasefire, with diplomatic negotiations—particularly regarding nuclear issues—reportedly reaching a total deadlock.

Skyrocketing Oil Prices and Market Impact

As a direct consequence of the turmoil in the Middle East, global oil benchmarks have surged. Brent crude is currently trading in the high range of $113 to $114 per barrel, while West Texas Intermediate (WTI) has climbed to between $105 and $106 per barrel. The combination of attacks on UAE energy facilities and the potential blockage of the Strait of Hormuz has created a supply-side shock that investors are still trying to price into the equity markets.

Domestic Outlook: Stability Amidst a Slowdown

On the home front, Indonesia's macroeconomic data presents a mixed picture. Inflation appears to be cooling, with the Consumer Price Index (CPI) recorded at 2.42 percent in April 2026, while core inflation held steady at 2.44 percent. These figures suggest that domestic price pressures are becoming increasingly manageable. Furthermore, Indonesia’s trade balance maintained its impressive winning streak, recording a surplus of $3.32 billion—marking the 71st consecutive month of surplus.

However, it isn't all positive news. The trade surplus actually fell below market expectations. Exports saw a year-on-year (yoy) decline of 3.1 percent, and imports dropped even more sharply by 1.51 percent. These figures hint at weakening external demand and a moderation in domestic economic activity. This sentiment is further supported by the Manufacturing PMI, which has slipped back into contraction territory at 49.1, signaling that the momentum of industrial growth is losing steam under the weight of global pressure.

Global and Regional Market Context

The cautious mood in Jakarta reflects a broader trend seen in international markets. On Monday, European markets closed in the red, with the Euro Stoxx 50 dropping 2.18 percent and Germany's DAX falling 1.24 percent. Across the Atlantic, Wall Street also faced a synchronized sell-off; the Dow Jones Industrial Average tumbled 1.13 percent, while the S&P 500 and Nasdaq Composite fell 0.41 percent and 0.21 percent, respectively.

In Asia, the picture was slightly more fragmented this morning. While Japan’s Nikkei 225 managed to gain 0.38 percent and the Shanghai Composite edged up 0.11 percent, other major hubs felt the pressure. Hong Kong’s Hang Seng index dropped 0.74 percent, and Singapore’s Straits Times Index slipped 0.30 percent. With 11 large-scale companies currently preparing for IPOs on the IDX and major regulatory moves like OJK's upcoming appointment of the new BEI board of directors, the Indonesian capital market remains in a state of transition amidst this global turbulence.