OPEC+ Production Cuts ICP Prices To 79.34 US Dollars Barrel

Illustration. (Photo: Doc. Antara)

JAKARTA - The government through the Ministry of Energy and Mineral Resources (ESDM) set the price of Indonesia Crude Price (ICP) in April at 79.34 US dollars per barrel. This figure is an increase compared to March 2023 of 74.59 US dollars per barrel.

The price of the ICP is listed in the Decree of the Minister of Energy and Mineral Resources (Kepmen ESDM) Number 174.K/MG.03/DJM/2023 concerning the Price of Indonesian Crude Oil in April 2023 on May 2, 2023.

Head of the Communications, Public Information Services, and Cooperation Bureau of the Ministry of Energy and Mineral Resources Agung Pribadi revealed that from the Analysis of the Indonesian Crude Oil Price Team, the increase in ICP in April was influenced by the policy of OPEC+.

"In early April, OPEC+ announced additional production cuts of 1.16 million Barrel Oil Per Day (BOPD), beyond market expectations. So that the total OPEC+ production cuts include an extension of Russia's production cuts to 3.66 million bopd, equivalent to 3.7 percent of global crude demand", Agung said, quoted Wednesday, April 3.

Furthermore, Agung explained that from the EIA (Energy Information Administration) report, there was a decline in stock in April compared to March 2023, which consisted of crude oil of 9.1 million barrels to 460.9 million barrels; Gasoline of 1.5 million barrels to 221.1 million barrels; and Distillate of 1.6 million barrels to 111.5 million barrels.

Then another factor, continued Agung, was the cessation of Iraq's crude oil supply through a pipeline by Turkey of 450,000 bopd, after Iraq won the arbitration which said Turkey had violated the mutual agreement by allowing the Kurdistan Regional Government to export without the approval of the Iraqi Central Government.

Meanwhile, in the OPEC report in April 2023, the growth in world oil demand in 2023 has not changed from the previous month's report of 2.3 million bopds. However, oil demand in Non-OECD countries (Organization for Economic Cooperation and Development) was revised higher due to improved economic activity than expected in China, the Middle East, Latin America and other European regions.

Meanwhile, in the IEA (International Energy Agency) report in April 2023, it was stated that the growth in demand for world crude oil in 2023 by 2 million bopds to 101.9 million bopds was the highest record, following the recovery of Chinese oil consumption, especially after the revocation of the zero-covid policy.

In addition, the IEA also said that the world crude oil supply fell by 400,000 bopd due to production cuts by a number of producers in May. In line with a report on the amount of US rig oil from Baker Hughes, which is an indicator of potential oil supply, has reached its lowest level since June 2022.

For the Asia Pacific region, the increase in crude oil prices, apart from being caused by these factors, is also influenced by China's growing economy of 2.2 percent, increasing crude oil imports and increasing Chinese refinery activities to meet fuel export demand and increasing local consumption, after the lifting of the zero-covid policy.

"Then, the demand for strong fuel from India results from stable economic growth, thanks to the support of the government spending plan and cutting income taxes," said Agung.