JAKARTA - The Ministry of Energy and Mineral Resources (ESDM) through the Directorate General of Oil and Gas (Migas) announced an increase in the average price of Indonesian crude oil or Indonesia Crude Price (ICP) in July 2023.
It is known that the average ICP price has increased by 5.70 US dollars per barrel from 69.36 dollars per barrel to 75.06 US dollars per barrel.
The increase in major crude prices in the international market was influenced, among other things, by indications of tightening global oil supply, as OPEC+ production cuts were cut, especially Saudi Arabia and Russia.
The determination of the ICP in July 2023 amounting to 75.06 US dollars per barrel is stated in the Decree of the Minister of Energy and Mineral Resources Number 272.K/MG.03/DJM/2023 concerning the Price of Crude Oil in July 2023 dated August 1, 2023.
The Indonesian Crude Oil Price Team in the Executive Summary said that the average price of major crude oil in July 2023 compared to June 2023, has increased. Several factors that affect the increase in major crude prices in the international market include indications of a tightening of global oil supply, as OPEC+ production cuts mainly in Saudi Arabia and Russia, and expectations that tightening policies carried out by the US and European Central Banks will end, as well as additional stimulus to China's economy.
"In addition, the increase in crude oil prices is influenced by global supply factors and demand for crude oil as well as the global economy," wrote the Price Team in the exum.
Regarding the condition of global crude oil supply, it is known that Saudi Arabia is expected to continue production reductions voluntarily until September 2023.
Then Russia's commitment to the OPEC+ supply cuts policy was marked by a decline in crude exports which hit its lowest level in the past seven months.
Meanwhile, the International Energy Agency (IEA) and Energy Information Administration (EIA) are in line in projecting a decline in crude oil supply in the second half of 2023.
Then the EIA added the potential for continued decline in crude oil supply until the next 5 (five) quarters as well as the potential decline in US crude stockpiles starting from Q3-2023 to Q4-2024.
Furthermore, the decline in the number of active rig oils in the US has reached its lowest level since March 2022.
While on the other hand, the increase in demand for oil from the transportation sector during the summer driving season as well as plans to refill US and IEA strategic oil reserves estimate an increase in global demand for oil in 2023 to increase by 2.2 million bopd to reach a record 102.1 million bopd.
Then an increase in the refinery margin resulting from the strengthening of crack spreads for gasoline products, middle distraction and, especially, fuel oil, as demand for fuel oil increases during the summer for power generation needs in the Middle East.
The increase in crude oil prices due to the global economy, among others, is due to the growth of the US GDP in Q2-2023 growing by more than 2.4 percent, which indicates that the US economy remains relatively strong despite aggressive attacks from tightening Federal Reserve policies.
Other indicators, the economic resilience of several countries in the European zone in Q2-2023, even at a time when a number of indicators related to manufacturing and services showed a weakening.
The Chinese government promised to provide additional stimulus to strengthen post-COVID recovery after the country's economic growth weakened in Q2-2023, the Price Team said.
The increase in Crude Oil Prices for the Asia Pacific region, apart from being caused by these factors, is also influenced by the strong demand for crude oil from Chinese and Indian refineries, especially for Russian crude oil, which is cheaper," concluded the Price Team.
The full development of crude oil prices in July 2023 compared to June 2023, as follows:
Brent' date went up by 5.35 US dollars/bbl from 74.70 US dollars/bbl to 80.05 US dollars/bbl.
WTI (Nymex) increased by 5.77 US dollars/bbl from 70.27 US dollars/bbl to 76.04 US dollars/bbl.
Brent (ICE) increased by 5.18 US dollars/bbl from 74.98 US dollars/bbl to 80.16 US dollars/bbl.
OPEC basketball rose by 5.61 US dollars/bbl from 75.19 US dollars/bbl to 80.80 US dollars/bbl.
On average, Indonesia's crude oil ICP increased by 5.70 US dollars/bbl from 69.36 US dollars/bbl to 75.06 US dollars/bbl.
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