Energy and Mineral Resources Ministry announced Indonesian Crude Price (ICP) has increased to US$61.32 per barrel in July - Photo: Special

JAKARTA (TheInsiderStories) – Energy and Mineral Resources Ministry announced Indonesian Crude Price (ICP) has increased to US$61.32 per barrel in July, 0.32 percent higher than the June figure at $61.00 per barrel.

“The decline in production of the Organization of Petroleum Exporting Countries (OPEC) affected the price of Indonesian Crude Price in July 2019,” the ministry said on Sunday (08/11).

The Indonesian Crude Oil Price Team said that OPEC crude oil production in June 2019 decreased by 68,000 barrels per day to 29.8 million barrels compared to the previous month as well as the cause of the increase in oil prices.

Besides cutting crude oil production by OPEC, increasing geopolitical tensions in the Middle East are also suspected to be one of the causes of the ICP increase in July, it said.

Some of the issues that have arisen include the increase in Iranian uranium enrichment which is considered to violate the Nuclear agreement in 2015, the capture of Iranian tankers in the Strait Gibraltar by Britain and two British oil tankers in the Strait of Hormuz by Iran. In addition, the statement of the United States (US) President Donald Trump, that the US Navy had shot Iranian drones in the Strait of Hormuz.

In the Asia Pacific region, the increase in crude oil prices was influenced by the addition of import quotas from the Chinese Government to several refineries in China totaling 56.85 million MT, thereby increasing demand for crude oil in China.

Also, the increasing crude oil throughput in China by 1.2 percent to 6.6 million barrels per day and in Taiwan by 1 percent to 970 thousand barrels per day compared to the beginning of July.

Another factor is the Energy Information Administration (EIA) reported that US crude oil stockpiles in July fell by 32 million barrels to 436.5 million barrels compared to June, the decline in US crude oil stockpiles due to typhoon Barry that attacked several facilities production in the Gulf of Mexico. Also, the increased demand for US crude oil by oil-importing countries following a decline in demand for Middle East Grades due to geopolitical tensions in the region.

Complete development of the average price of major crude oil in the international market in July compared to June was WTI (Nymex) rose by $0.33 per barrel from $54.71 per barrel to $55.04 per barrel.

Then, the OPEC basket increased by $1.75 per barrel from $62.92 per barrel to $64.67 per barrel. Brent (ICE) rose by $1.17 per barrel from $63.04 per barrel to $64.21 per barrel. ICP SLC increased from $61.84 per barrel to $61.98 per barrel. Except for Dated Brent, it decreased by $0.06 per barrel from $64.10 per barrel to $64.04 per barrel.

Previously, the Energy Ministry and House of Representatives which oversees energy policy, have agreed to assume an ICP of $60 per barrel for the 2020 state budget. The decision was made at a recent hearing, in which the two parties also agreed on the oil and gas lifting target at 1.893 million barrels of oil equivalent per day (BOEPD).

Cost recovery for 2020 is seen at $10 billion to $11 billion. Meanwhile, the amount of subsidized fuel was put at 15.87 million kiloliters (kl) and 7,000 million tons of liquefied petroleum gas (LPG) distributed in 3-kilogram kg canisters.

The ministry and the House also agreed to allocate Rp58.62 trillion ($4.15 billion) for electricity subsidies in 2020, down from Rp59.32 trillion this year, but Energy Minister Ignasius Jonan said the amount of the subsidy would be discussed further.

“There is a note that, if the electricity price for customers of 900 VA is adjusted, the subsidy will decrease by Rp6 trillion,” Jonan told media over the weekend.

Jonan said he had proposed Rp9.67 trillion for the energy ministry budget for 2020, including for salaries of civil servants, building maintenance, expansion of household gas connections, converter kid assistance for fishermen and electricity connections for low-income households.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com