ICP Prices Drop To 86.07 US Dollars Per Barrel

Illustration (Photo: Doc. Antara)

JAKARTA - The average price of Indonesian crude oil in September 2022 based on the calculation of Formula Indonesian Crude Price (ICP) was set at 86.07 US dollars per barrel, down by 8.10 US dollars from the previous 94.17 US dollars per barrel in August 2022.

This determination is stated in the Decree of the Minister of Energy and Mineral Resources Number 140.K/MG.03/DJM/2022 concerning the Price of Oil of the Minister of State of Indonesia in September 2022 dated October 3, 2022. "The average price of Indonesian crude oil for September 2022 is set at 86.07 US dollars per barrel," reads the fourth dictum of the Ministry of Industry.

Quoted from an official statement from the Directorate General of Oil and Gas, the Ministry of Energy and Mineral Resources (ESDM), the Indonesian Minister of Defense's Oil Price team in the executive summary explained, several factors that influenced the decline in crude prices in the international market include global economic conditions:

The US Federal Reserve Board raised the US interest rate by 0.75 percent to reduce inflation which could have an impact on reducing economic activity and decreasing demand for crude oil.

Market participants are concerned about the world's recession caused by monetary policy by major countries raising interest rates following the US, such as in the UK, Switzerland, and Norway.

Another factor, related to the world's crude oil demand:

1. The US Federal Reserve Board raised US interest rates by 75 basis points to reduce inflation which could have an impact on reducing economic activity and decreasing demand for crude oil. 2. Market participants' concerns over the world's recession caused by monetary policy by major countries raising interest rates following the US, such as in the UK, Switzerland, and Norway.

Another factor, related to the world's crude oil demand:

1. The IEA in its September 2022 report states that the projected growth in global oil demand to be 2 million barrels per day (bph), is down 100 thousand bp compared to projections in the previous month. 2. The end of the summer driving season which reduced fuel consumption in the United States.

Regarding the world's crude oil supply:

1. The IEA in its September 2022 report that the world's crude oil supply rose again by 790,000 bph in August 2022 to 101.3 million bp which is the highest point after the pandemic, which was partly due to increased production in Libya, the United Arab Emirates and Saudi Arabia. 2. IHS Markit in a September 2022 report that the supply of US crude oil is estimated to increase by 600 thousand bp in the fourth quarter of 2022 and 1.1 million bph in 2023.3. The production cuts of OPEC+ countries by 100 thousand bp are not very significant in supporting the balance of world crude oil supply and demand. 4. Total exports of Russian crude oil rose by 220 thousand bpd in August 2022 to 7.6 million bp.

Finally, based on the EIA Weekly Report (US Energy Information Administration), there was an increase in United States stock in September 2022 compared to the previous month:

1. Commercial crude stockpiles rose 12.3 million barrels to 430.6 million barrels.2. Disstate stock rose 2.7 million barrels to 114.4 million barrels.

As for the Asia Pacific region, the decline in crude oil prices, apart from being caused by these factors, is also influenced by market concerns over the projected demand for crude oil due to the decline in demand for Chinese crude oil with zero-Covid and lockdown policies in several areas in China, as well as routine maintenance of refineries in September-October 2022.

"OPEC in its September 2022 report showed that China's economic growth rate fell by 0.3 percent to 4.2 percent compared to the previous month's projection, as well as the decline in refinery throughput in Japan and South Korea," said the ex-sum of the Indonesian Minister of Commerce's Oil Price Team.

The following is the development of the average price of major crude oil in September 2022 compared to August 2022 as follows:

Dated Brent fell 10.13 US dollars per barrel from 99.99 dollars per barrel to 89.87 US dollars per barrel.

WTI (Nymex) fell USD 7.68 per barrel from USD 91.48 per barrel to USD 83.80 per barrel.

Brent (ICE) fell USD 7.17 per barrel from USD 97.74 per barrel to USD 90.57 per barrel.

OPEC basketball fell USD 6.48 per barrel from USD 101.94 per barrel to USD 95.46 per barrel.