Crude oil prices plunged to their lowest level in almost two decades amid the weak of United States (US) demand and rising domestic supply - Photo: Special

JAKARTA (TheInsiderStories) –  Indonesian government set the Indonesian Crude Price (ICP) in October 2019 at US$59.82 a barrel followed the downtrend of global economic growth and marked demand, the energy and mineral resources (EMR) ministry said yesterday (07/11). This figure lowered compared to September which was $60.84 per barrel.

“Market assumptions that global crude oil demand will continue to weaken as global economic growth deteriorates, also causes a fall in oil prices in October,” said the ministry.

The trade war dispute, which was promoted by the United States (US) with China also still triggers market pessimism about the improvement of the global economy.

While, the Indonesian Oil Price Team Note rated that the average price of major crude oil in the international market in October 2019 has decreased compared to September 2019. Brent crude oil has decreased from $62.77 per barrel to $59.72 per barrel.

West Texas Index dropped to $54.01 a barrel from previousl USD56.97. In addition, OPEC basket down from $62.36 a barrel to $59.88 per barrel and Brent (ICE) plunged by $2.66 per barrel to $59.63 a barrel from $62.29 per barrel .

Another factor determining the October ICP is market confidence in the guarantee of global crude oil supply along with the increasing crude oil commercial stocks of OECD countries. As reported by the International Energy Agency (IEA) report for the October 2019 period.

“More than 3 million barrels and an additional stock of 1.6 million barrels from the IEA member countries which can be released to the market at any time,” the ministry adds.

Not only that, market doubts over a number of attacks on crude oil facilities in Arabia and the certainty and speed of Saudi Arabia returning most of the lost oil supply, became the basis for consideration of setting the ICP in October.

For the Asia Pacific region, the decline in crude oil prices is also affected by the abundant supply of oil products due to increased refinery activities in several Asian countries.

In the 2019 State Budget the government set ICP at $70 a barrel following the dynamics of world oil prices. This figure higher compared to the 2018 State Budget at $48 a barrel,

Oil and gas lifting is set at 2,025 thousand barrels of oil equivalent per day, consisting of oil lifting 775 barrels per day (bpd) and natural gas lifting 1,250 million standard cubic feed per day (MMSCFD).

Compared to the 2018 State Budget, the number of assumptions on oil lifting fell by 25 bpd while the gas rose by 50 MMSCFD. Furthermore, the replacement of oil and gas operating costs (cost recovery) is set as much as $10 billion.

Both parties also agreed to lowered the volume of subsidized fuel to 15.11 million kiloliters (KL), divided into kerosene 610,000 KL and diesel 14.50 million KL. While the volume of three kilogram of LPG is set to rise to 6.978 million tons from 2018 only 6.450 million tons.

Fixed subsidies for diesel oil also experienced a change of Rp2,000 per liter from the previous year Rp500 a liter. As for electricity subsidies, it was approved to be Rp57.67 trillion.

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