Arab And Russia Limit Production, Indonesian Crude Oil Prices Rise To 90.17 US Dollars Per Barrel

Illustration of crude oil (photo: between)

JAKARTA - The government through the Ministry of Energy and Mineral Resources (ESDM) has set the price of Indonesian crude oil (ICP) at 90.17 US dollars per barrel.

This average price experienced an increase of 7.58 US dollars per Barrel, from 82.59 US dollars per barrel in the previous month.

The increase in crude prices in the international market, among which is influenced by voluntary cuts in oil production to be continued until the end of 2023 by Saudi Arabia by 1 million barrels per day (bpd) and Russia by 300 thousand barrels per day (bpd).

"The determination of the ICP in September 2023 is 90.17 US dollars per barrel, listed in the Decree of the Minister of Energy and Mineral Resources Number 341.K/MG.03/DJM/2023 concerning the Price of Crude Oil in September 2023 dated October 2, 2023," wrote the Ministry of Energy and Mineral Resources, Friday 6 September.

The Indonesian Crude Oil Price Team in the Executive Summary said that the average price of crude oil in September 2023 had increased compared to August 2023.

Several factors that influence the increase in the price of major crude oil in the international market include voluntary cuts in oil production to be continued until the end of 2023 by Saudi Arabia by 1 million bpd and Russia by 300 thousand bpd.

"In addition, the increase in crude oil prices is also influenced by global crude oil demand factors, China's economic condition and world oil stocks and the United States," said the Price and Exsum Team.

Meanwhile, the global crude oil demand rate, the IEA estimates that there will be an increase in the projected demand for world oil in 2023 to 2.2 million bpd to 101.8 million bpd, with an increase in world oil demand in Semester II 2023 reaching 1.5 million bpd compared to Semester I 2023. Meanwhile, the S&P Global Commodity Insights estimates that the increase in demand for oil will increase in the fourth quarter of 2023 by 2.8 million bpd.

As for China's economic factors that affect the increase in world crude oil prices, it is:

The Central Bank of China has lowered the Reserved Required Ratio by 25 basis points to increase China's economic activity, which has returned to post-National Energy Administration (NEA) China, which said there was an increase in China's electricity consumption by 3.9 percent yoy in August 2023.

China's Crude Throughput Refinery has the potential to increase again in September 2023. Based on China's Nasional Bureau of Statistics, China's Crude Throughput Refinery reached 15.3 million bpd in August 2023, an increase of 2.5 percent (mom).

Based on the Chinese General Customs Administration, the cumulative imports of Chinese crude oil reached 52.8 million tons in August 2023, an increase of 30.85 percent yoy and 20.87 percent mom.

Regarding oil stocks, EIA estimates the projected decline in world oil stocks by 0.6 million bpd in the third quarter of 2023 and 0.2 million bpd in the fourth quarter of 2023. And the EIA also said that the United States commercial Crude Oil stock had decreased by 6.6 million barrels at the end of September 2023 to 421.7 million barrels compared to the end of August 2023.

Another fact is that there was a decrease in Russian oil exports in August 2023 by 150 thousand bpd (mom) or 570 thousand bpd (yoy) to 7.2 million bpd, and there was a potential for a world oil deficit of up to 3 million bpd in the fourth quarter of 2023, said the Price Team.

Meanwhile, for the Asia Pacific region, the increase in crude oil prices, apart from being caused by the above factors, was also influenced by an increase in the crude run rate of refineries in South Korea during September 2023 which rose to 0.4 million bpd compared to the end of August 2023, reaching 2.7 million bpd at the end of September 2023.