GEOPOLITICS, MARKET CONTESTABILITY, AND INDONESIA’S STRATEGIC POSITION IN THE GLOBAL ENERGY TRANSITION

Abstract

Energy markets around the world are undergoing major shifts, driven by climate pressures, geopolitical competition, and rapid technological change. Tensions between the United States and Iran have driven up oil prices recently, underscoring how closely politics and market forces and economic stability are connected. Using a content analysis of qualitative data, the study analyses the strategic position of the most populous Muslim-majority state, Indonesia, in the changing world’s energy scene using game theory and contestable market theory. The results indicate that high oil prices constitute an impetus towards renewables, but also that revenues from fossil-fuel extraction are an important aspect of financing the transition. Meanwhile, the battle between the United States and China over semiconductor supply chains and renewable technologies has heightened the search for strategic partners. Indonesia is in a strong position with the nations geothermal, nickel, and geopolitical factors. But the country is still using and losing a great deal of energy, and has some big challenges to overcome, including regulatory complexity, technological readiness and market uncertainty. In the end, Indonesia’s success will rely on the nation’s ability to adapt to a new wave of coalition shifts, leverage natural advantage, and develop coordinated policies that maintain quotas for its reliance on fossil fuels alongside the ambitious expansion of renewables to build both energy and economic security