The ministry of energy and mineral resources (MEMR) decided to kept Indonesia' fuel prices even the global oil prices has dropped below US$20 a barrel - Photo: Special

JAKARTA (TheInsiderStories) – The ministry of energy and mineral resources (MEMR) decided to kept Indonesia’ fuel prices even the global oil prices has dropped below US$20 a barrel. The reasoned, said the minister, Arifin Tasrif, the the fall in oil prices is temporary and would return above $40 per barrel by the end of this year.

Moreover, he noted, Organization of Petroleum Exporting Countries and its allies (OPEC+) have agreed to cut oil production by 9.7 million barrels per day (mb/d) in May to June. Then, to cut oil production by 7.7 mb/d starting July to December, and 5.8 mb/d in January 2021 until April 2022.

“We are still observing the development of crude oil prices, especially in May and June,” the minister said in a virtual hearing the parliament on Monday (05/04).

He also claimed, fuel prices in Indonesia are cheaper compared to other countries in Southeast Asian region and has dropped twice in this year. In addition, the producer’ fuel sales has declined due to the COVID-19 pandemic.

On Monday, oil prices extended its rally into a fifth day on signs that a glut might be easing as leading producers slash their activity. West Texas Index crude price climbed 3.1 percent on Monday to US$21.72 a barrel and Brent crude price jumped to $28.29 per barrel. Genscape reported a 1.8 million barrel build in inventories in Cushing, Oklahoma, lower than usual stockpiles.

On April 12, in the 10th (extraordinary) OPEC+ ministerial Meeting, the oil producers reaffirmed the commitment on the ‘Declaration of Cooperation’ (DoC) to a stable market, the mutual interest of producing nations, the efficient, economic and secure supply to consumers, and a fair return on invested capital. The countries agreed to adjust crude oil production by 9.7 mb/d starting May 1 until June 30.

From July 1 to Dec. 31, the total adjustment will be 7.7 mb/d. It will be followed by a 5.8 mb/d adjustment for a period of 16 months, from Jan. 1, 2021 to April 30, 2022. The baseline for the calculation of the adjustments is the oil production of October 2018, except for the Kingdom of Saudi Arabia and the Russian Federation, both with the same baseline level of 11.0 mb/d.

The agreement will be valid until April 30, 2022. However, the extension of this agreement will be reviewed during December 2021.

The organization also call upon all major producers to provide commensurate and timely contributions to the efforts aimed at stabilizing the oil market, mandated of the Joint Ministerial Monitoring Committee and its membership, to closely review general market conditions, oil production levels and the level of conformity with the DoC and this Statement.

The oil cartel also reaffirm that the DoC conformity is to be monitored considering crude oil production, based on the information from secondary sources. OPEC+ will meet again on June 10 via video conference, to determine further actions, as needed to balance the market.

Written by Staff Editor, Email: theinsiderstories@gmail.com