Rising Oil Prices Put Financial Markets at Risk

RRI.CO.ID, Jakarta - Global crude oil prices rose sharply in morning trading today. WTI crude climbed to around $91 per barrel, while Brent crude traded at around $96 per barrel.

The rise in oil prices came as geopolitical conflict between Iran and the United States escalated again. The renewed conflict has increased concerns in financial markets and weakened investor sentiment across the region.

Most Asian stock markets traded in negative territory. Indonesia’s IHSG, however, remained in positive territory and close to its previous closing level. The index opened at 6,625, but its gains have since narrowed, raising the risk of a correction.

The Indonesian rupiah also weakened in morning trading, reaching around 17,760 per US dollar. Pressure on the rupiah has increased as the inflation outlook becomes more challenging. Rising oil prices could also push interest rates higher.

These pressures could affect both the IHSG and the rupiah. Higher energy costs could increase the government’s fiscal burden and make it more difficult to stimulate economic growth, creating further challenges for the economy.

Today, the IHSG is expected to trade between 6,570 and 6,690. The rupiah, meanwhile, could test the psychological level of 17,800 per US dollar.

At the same time, global gold prices fell to around $4,305 per troy ounce, or approximately IDR2.47 million per gram. From a technical perspective, gold could find temporary support around $4,300.

However, gold could face further pressure in the short term if crude oil prices move closer to $100 per barrel. Rising oil prices could put pressure not only on gold, but also on the IHSG and the rupiah, leaving all three assets vulnerable to further volatility.

Writer: Gunawan Benjamin (Economist, Islamic University of North Sumatra)