Former Deputy Minister Of Energy And Mineral Resources Arcandra Tahar Ramal Migas Prospects In 2023

Former Deputy Minister of Energy and Mineral Resources Arcandra Tahar. (Photo: Doc. Antara)

JAKARTA - Deputy Minister of Energy and Mineral Resources (ESDM) 2016-2019 Arcandra Tahar conveyed the outlook for the oil and gas sector in 2023.

Through uploads on his Instagram social media account, Arcandra revealed, after the conflict between Ukraine and Russia which lasted for almost a year and the COVID-19 pandemic became increasingly under control.

"It seems that oil prices will look for new equilibrium points in 2023. From a demand point of view, the world oil demand is projected to increase by around 2 million barrels per day (BPD) in 2023," he said as quoted Wednesday, February 22.

Arcandra added, on the other hand, supply also shows no signs of deficiencies.

In fact, OPEC+ has cut production volume in November 2022 by 2 million BPD to stabilize oil prices at levels of 80 to 90 dollars per barrel.

Judging from the world's political side, he continued, OPEC+'s move to cut production last year was not in line with the wishes of the United States (US) government.

With less supply, the US is concerned that oil prices will remain high and make it difficult for the US economy, which is struggling to reduce inflation.

However, OPEC+ sees price stability at levels of 80 to 90 dollars per barrel much more important than the consideration of rising inflation in almost all developed countries in the world.

"If we may analyze more deeply, the capital system that prioritizes free trade and is supported by supply and demand law has been utilized properly by OPEC+. The supply side can actually control prices last year," explained Arcandra.

Meanwhile, regarding the demand side that can control prices in 2023, Arcandra said there is no group of people, or organizations or even heads of state capable of predicting oil prices in the future.

In addition to supply and demand laws, oil prices are influenced by many things, including world geopoliticals.

"With the increase in demand of around 2 million BOPD in 2023, and the 2022 OPEC+ production cuts, there is a possibility that oil prices will remain at the level of 80 to 90 dollars per barrel this year.

"The mistake or possible factor in changing this price level is the end of the Ukraine-Russian conflict," he added.

Arcandra said, many scenarios may occur in 2023, including that Nordstream 1 and 2 gas pipelines are allowed to operate normally so that gas supply to European countries can be met again.

"With the normal supply of gas to Europe, high inflation caused by the energy crisis can be resolved," he said.

As a result, the need for crude and coal will also be corrected and oil prices may drop at a level below 80 US dollars per barrel.

"However, if the end of the Ukrainian-Russian conflict with several conditions that put Russia's energy sector under pressure or not running properly, then the price of oil could remain at the level of 80 to 90 dollars per barrel or even higher. Oil importing countries will certainly experience difficulties in meeting their energy needs," Arcandra concluded.