JAKARTA (TheInsiderStories) – The recognition of Jerusalem, Palestine as the capital of Israel by US President Donald Trump, replacing Tel Aviv, is likely to have an impact on the economies of countries in the Middle East, and could trigger higher oil prices.
The Indonesian government has expressed concern that Trump’s announcement could signal a major shift in longstanding US policy, including a complete delegitimization of the US role in peace negotiations between Israelis and Palestinians.
“If there is a major conflict again, oil prices will rise, or trade will fall off. There will certainly be an indirect effect,” stated Indonesian Vice President Jusuf Kalla, as quoted by Antara News Agency, Friday (8/12).
Indonesia became a net importer of petroleum and other liquids after 2004, once domestic demand exceeded production; in fact, domestic production of petroleum and other liquids had been on a general decline since the mid-1990s. Today, Indonesia consumes 1.4 million barrels of oil per day.
Indonesia produces 800,000 barrels of crude oil per day, while Indonesian oil refineries can deal with 1 million barrels per day. As a result, the government needs to import 200,000 barrels of crude oil per day to match demand. Any rise in the global crude price could hammer the state budget amid a shortfall threat.
Wardah Khalid is an analyst, activist, and speaker on the Middle East, refugees, and Muslim-American issues; he opined that recognizing Jerusalem as Israel’s capital and moving the US Embassy there will have a detrimental impact on Israeli-Palestinian peace negotiations, a process that many suspects was never an honest priority for the US.
Oil is starting to regain ground lost in its sharp sell-off a day earlier, with both US and global benchmarks gaining more than 1 per cent on Thursday. A barrel of Brent, the global standard, rose 1.5 per cent to US$62.13 by midday in New York.
A day earlier, it fell 2.56 per cent to close at US$61.22, marking the first time since November 16 that it had settled below US$62 and its lowest close since November 2, according to Thomson Reuters data.
West Texas Intermediate, the US benchmark, advanced 1.25 per cent to US$56.67. This came after it tumbled 2.8 per cent on Wednesday to close at US$55.96, its lowest settlement price since November 16.
The fall came after data pointed to a sharp gain in US inventories of gasoline and distillates, which are made from crude.
Oil has been volatile over the past few weeks, as global producers gathered to hammer out an agreement on production cuts, while eyeing growing shale production in the US.
Investors are also watching strike threats from one of the main oil unions in Nigeria, which is Africa’s top oil exporter, according to Reuters.
Written by Elisa Valenta, email : email@example.com