Jakarta, IO – The Indonesian government assessed that the Iran-Israel conflict will have an impact on the national petrochemical industry because the country still imports the bulk of the raw material, naphtha.
Deputy Foreign Minister Pahala Mansury said the conflict between the two major military powers in the Middle East may impact the global supply chain as shipping to and from the Europe may be disrupted, especially in the choke point, the Strait of Hormuz, per Katadata, Tuesday (16/4).
Naphtha is derived from the refining of crude oil. A fifth (up to 21 million barrels) of global oil production passes through the Strait of Hormuz per day in 2018.
“We need to be cautious regarding the impact of the Iran-Israel conflict on global supply chains, especially on industries in Indonesia,” said Pahala.
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Pahala said the government would closely monitor potential impacts arising from the conflict, in particular energy and food prices, investment risk premium and capital outflow.
The government is also working on mitigation strategies should the latest armed conflict in the Middle East become protracted. “The government will also focus on diplomatic efforts to reduce or prevent an escalation,” he said. (bp)