The Government Calculates The Impact Of World Oil Reduction On Domestic Fuel Prices

Coordinating Minister for the Economy Airlangga Hartarto. (Photo: Doc. Antara)

Coordinating Minister for the Economy Airlangga Hartarto said the government was still monitoring the impact of the downward trend in world crude oil prices towards the possibility of adjusting the price of subsidized fuel oil (BBM) in the country.

"Our oil price is still below the subsidy price, so of course it will be monitored sustainability rather than decreasing oil prices," said Coordinating Minister Airlangga Hartarto as quoted by Antara, Monday, January 30.

In addition, he said, the government has implemented the use of a mixture of diesel fuel with a biodiesel of 35 percent or B35.

This reduces diesel imports and also reduces the number of subsidies disbursed by the government for this type of fuel.

"However, we will continue to monitor this (decreasing world crude oil prices)," said Coordinating Minister Airlangga Hartarto.

The government is also preparing a policy to make aviation fuel costs more competitive.

The increase in avtur prices has triggered an increase in transportation rates which also has an impact on rising inflation.

"This will be calculated and will be meeting how we can reduce costs for the avtur," said Coordinating Minister Airlangga.

As previously reported, oil prices fell in Asian trade on Monday afternoon as global producers are likely to maintain production and investors are cautious ahead of the meeting of the Federal Reserve (Fed) Central Bank which is prone to spurring market turmoil.

Brent crude futures slipped 74 cents, or 0.8 percent, to US$85.92 a barrel. Meanwhile, the price of US West Texas Intermediate crude futures fell 61 cents, or 0.8 percent, to US$79.07 per barrel.

Ahead of the Fed meeting scheduled for January 31-1 February, the market widely expects the US central bank to raise interest rates by at least 25 basis points.

This raises concerns that an extension of the Fed's loan increase will hamper fuel demand growth in the world's largest oil consumer country.

"Probably burdened by potential interest rate hikes in the upcoming Fed meeting," APAC's Chief Analysis Officer Serena Huang said in Vortexa, in an e-mail.

Ministers from the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, collectively known as OPEC+, will likely not change their current oil production policies when they will meet virtually on February 1, 2023.