JAKARTA (TheInsiderStories) – The average of Indonesia Crude Price (ICP) in February 2020 stood at US$56.61 per barrel, said the energy and mineral resources ministry last week. The price lowers compared to January 2020 at $65.38 a barrel.

The ministry stated, the fall in ICP prices was influenced by the decline in global crude oil demand, which caused a fall in the average price of major crude oil in international markets, such as Brent decreased by U$8.06 per barrel to $55.44 a barrel.

West Texas Index also declined by $6.99 a barrel to $50.54 per barrel, OPEC basket dropped by 9.33 per barrel to $55.77 per barrel. And Brent (ICE) decreased from $63.67 per barrel to $55.48 a barrel.

The spread of the COVID-19 in various countries has caused concern over global economic conditions and the decline in demand for crude oil. For the Asia Pacific region, the spread of the virus has resulted in the non-operation of public transportation and the low economic activity and make the demand for crude oil is low.

The falling prices were also influenced by slowing economic growth in India. In addition to the spread of the corona virus, the decline in the main crude oil prices on the international market in February 2020 was also caused by negative market sentiment over Russia’ uncertainty about the cartel oil OPEC and its allies plan to carry out additional cuts in crude oil production by 600,000 barrels per day (bpd).

OPEC has projected the global crude oil demand in 2020 will drop by 250,000 bpd to 100.98 million bpd. While, Untied States’ (US) International Energy Agency (EIA) sees the global crude oil demand will drop by 500,000 bpd to 100.1 million bpd in this year.

The EIA also released an increase in US crude stockpiles in February 2020 by 8.3 million barrels to 443.3 million barrels compared to January 2020, which also affected the falling prices world oil.

On the latest meeting in Vienna, Austria last week, OPEC and key ally Russia failed to agree  on a cut to oil production that would have contained the plunge in the price of crude caused by the new coronavirus outbreak’ massive disruption to world business.

The oil price fell sharply in international markets as a result, with the international benchmark plunging 9.4 percent, down by a third since the start of the year. The unraveling of the talks in Vienna also underscores the limited power of the cartel to influence world energy markets, unlike its heyday in the 1970s.

OPEC had wanted to cut output by 1.5 million bpd, or about 1.5 percent of world production. Russia and other non-OPEC member have been working with the cartel in recent years and agreed on earlier cuts.

However, the president Vladimir Putin can tolerate low oil prices better than Saudi can and appears reluctant to slash output of its main revenue-making export. Otherwise, Crown Prince Saudi Mohammed bin Salman needs $83.60 per barrel to balance its state budget while Russia needs only $42.40 a barrel.

Even if OPEC and its allies agree on a production cut in the coming days or weeks, analysts say prices are unlikely to rise much. That because the global economy is slowing rapidly and US does not cooperate in its output decisions, has ramped up in recent years, flooding the market and keeping prices down.

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