Government Sets Crude Oil Price In May 2023 At 70.12 US Dollars Per Barrel

The Ministry of Energy and Mineral Resources (ESDM) has set the Price of Indonesian Crude Price (ICP) in May at 70.12 US dollars per barrel. This decision is contained in the Decree of the Minister of Energy and Mineral Resources Number 216.K/MG.03/DJM/2023 concerning the Price of Crude Oil in May 2023.

This figure has decreased by 9.22 US dollars per barrel from 79.34 US dollars per barrel in April 2023.

Head of the Communications, Public Information and Cooperation Service (KLIK) Bureau of the Ministry of Energy and Mineral Resources Agung Pribadi explained that the world's average crude oil prices have also decreased. The decline in the average major crude oil prices was due to market concerns over the world economy due to inflation, high interest rates, and US debt which could cause a global recession and reduce demand for oil.

"This condition also triggered a decline in refinery margins globally in the 2nd quarter of 2023. In addition, post-invasion Russian oil exports hit record highs in April 2023 to reach 8.3 million barrels per day, including plans for Russia's exports to China to increase in the range of 40 percent by 2023," said Agung, quoted on Saturday, June 10.

He continued, another factor that caused the decline in crude oil prices in the May 2023 period was the report of Platts in May 2023 which said that the projected growth in world crude demand in 2023 was revised to fall by 0.17 million barrels per day compared to the previous month's projections.

Then, in early May 2023, the market was again worried about the stability of the US banking sector after the decline in Pacwest Bank deposits by 9.5 percent.

The US dollar's appreciation for other major currencies in May 2023 compared to April 2023.

"For the Asia Pacific region, the decline in crude oil prices, apart from being caused by these factors, was also influenced by China's Crude throughput experiencing its lowest point in the last 4 months, where offline refineries reached 1.2 million barrels per day. Chinese imports in April 2023 fell 16.2 percent to 10.36 million barrels per day compared to March 2023," Agung explained.

Another factor that caused a decline in crude oil prices in the Asia Pacific region, added Agung, was China's Manufacturing Purchasing Manager Index in April 2023, down to 49.2 compared to March 2023 of 51.9. Then the decline in Korean imports to 2.6 million bpd in April 2023.

"In addition, there was also a decline in demand for oil in Japan throughout May 2023, which was triggered by several refineries experiencing shutdown," concluded Agung.