Indonesia’s government has moved to loosen restrictions on coal output as global energy markets reel from the fallout of the war in Iran, saying it will raise miners’ production limits and reassess export taxation to capture higher state revenue.
Coordinating Economic Minister Airlangga Hartarto announced the measures as authorities seek to respond to a sharp uptick in energy prices triggered by supply disruptions stemming from the conflict in the Middle East. Accor...
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ding to Bloomberg, the change will allow producers to increase coal volumes beyond recent ceilings, while officials are examining adjustments to export taxes on the fuel.
The decision comes amid a wider scramble to stabilise energy availability after attacks on oil and gas infrastructure and threats to shipping through the Strait of Hormuz have curtailed flows of crude and liquefied natural gas. Analysts at the Center for Strategic and International Studies say damage to facilities across the Gulf and the effective paralysis of maritime traffic have forced producers to suspend exports and close some fields, helping push Brent crude sharply higher in early March. The World Economic Forum estimates roughly one fifth of global crude and natural gas production has been affected by the disruptions, contributing to a more than 25 percent rise in oil prices and renewed inflationary pressure for consumers and businesses.
Financial institutions warn of broader macroeconomic knock-on effects. Morgan Stanley has signalled that persistent supply shocks from the Strait of Hormuz could lift gas and petrol costs, add to consumer price inflation, dampen household spending and complicate central-bank policy decisions, potentially increasing the likelihood of smaller interest-rate moves or a pause in tightening. Prolonged escalation also risks higher defence spending and wider fiscal deficits, which could push up long-term bond yields and weigh on equities.
Indonesia’s move to expand coal output is notable against recent domestic policy shifts. Reporting by S&P Global indicated that Jakarta had informed many miners of reduced production quotas for 2026, with cuts of between about 9 percent and 80 percent communicated to individual companies. That earlier guidance, aimed at curbing planned volumes, had implications for miners’ contractual commitments and state non-tax revenue; the new direction appears to reverse parts of that approach in response to the external shock.
Industry observers say raising coal availability may temper some immediate supply-side stress for markets that rely on thermal coal as an alternative to gas and oil, but the effect on global prices will depend on the scale and timing of additional Indonesian shipments and whether buyers face logistical constraints. The government’s review of export taxes could further shape incentives for producers and the pace at which incremental volumes reach international buyers; officials have framed the tax review as a way to bolster state coffers amid the price surge.
Taken together, the Indonesian measures reflect a policy balancing act: managers must weigh domestic fiscal interests, miners’ contractual obligations and international market stability while responding to a geopolitical shock that has amplified energy-market volatility worldwide.
Source: Noah Wire Services
