Russia-Ukraine Conflict Is Getting Worse, Observers Predict Crude Oil Prices Will Skyrocket

Illustration/between

JAKARTA - Executive Director of Energy Watch, Mamit Setiawan believes that the Russia-Ukraine conflict will trigger an increase in oil prices. In fact, he predicts the price of crude oil could penetrate 120 to 130 US dollars per barrel.

"Oil prices will be in that range as the conflict escalates," he told VOI, Sunday, February 27.

According to Mamit, this price increase will indeed bring benefits to Indonesia in the upstream sector. Where this certainly has an impact on the increase in the Indonesian Crude Price (ICP) aka crude oil above the assumption of the 2022 State Budget.

"This will increase state revenue from upstream oil and gas both from PNBP and from other taxes," he said.

For that, he said, upstream oil and gas activities in Indonesia should be increased. In addition to pursuing the lifting target in the APBN, it is also pursuing a good price. "Economic prices are in a good position," said Mamit.

Thus, continued Mamit, the upstream oil and gas workforce will also be increasingly absorbed, the upstream oil and gas supporting industry can also grow and exploration and EOR activities can be a momentum to start optimally. However, he said, on the other hand, this price increase will also be burdensome in the downstream sector. "An increase in oil prices, which is offset by an increase in ICP, will increase the burden of subsidies for the energy sector," he said.

Because, he said, the price of electricity and fuel will increase the burden of subsidies. In addition, the price of non-subsidized general fuel will also increase.

"Companies like Pertamina, which until now have not been able to increase the price of Pertamax, will be increasingly depressed by their finances. Likewise, compensation for Pertalite which is only 50 percent in accordance with Perpres 117/2021 is still not helpful," concluded Mamit.