Covid-19 Pandemic Pushes March ICP Down to USD34.23/Barrel

MINISTRY OF ENERGY AND MINERAL RESOURCES

REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 144.Pers/04/SJI/2020

Date: 2 April 2020

Covid-19 Pandemic Pushes March ICP Down to USD34.23/Barrel

The spread of Covid-19 as a global pandemic continues to push down the world's oil prices. The condition has also impacted on the average price of Indonesian crude oils or Indonesian Crude Price (ICP) of March 2020.

"March ICP is down to USD34.23/barrel or falling by USD22.38/barrel from USD56.61/barrel in February 2020," said Head of Bureau of Communication, Public Information Services, and Cooperation of Ministry of EMR, Agung Pribadi, Thursday (2/4).

The ICP, Agung continues, is set out in Decision of Minister of EMR Number 79.K/12/MEM/2020 on Pricing of Indonesian Crudes of March 2020 which is effective from 1st April 2020.

Agung explains the main cause of the ICP decline is Covid-19 spread in most of crude producing countries, leading to lower production. "Travel restriction in a number of countries also contributes to the drastic fall in the global oil demand," he said.

International Energy Agency (IEA) reported the projection for global crude demand in 2020 was down by 1.1 million barrels per day to 99.90 million barrels per day. On the other hand, IEA reported US crude stock in March 2020 grew by 11.3 million barrels to 455.4 million barrels compared to that of February 2020.

Meanwhile, an OPEC's report showed the projection for global crude demand in 2020 was down by 1 million barrels per day to 99.73 million barrels per day.

OPEC reported the declining demand for oil on the international market was due to slower economic growth. The world's GDP growth in 2020 slides by 0.6% to 2.4% because of weakening economy in a number of advanced countries and the impacts of Covid-19 attack.

Another main factor contributing to the change in March ICP, continues Agung, is Saudi Arabia's decision to lower the selling price of their crude to grab market share and its plan to increase production after Russia's refusal to join the plan to further reduce OPEC+ production. All of these have increased market players' concern over the already oversupplied condition.

According to the Indonesian Crude Oil Price Team, crude oil throughput from Japan refineries which was less by 2.81 million barrels per day compared to refinery capacity of 3.52 million barrels per day at the end of March 2020 is the deciding factor for the Asia Pacific region. Besides, oil refineries in South Korea have also reduced consumption from US and turned to Middle East crudes in line with the declining spread of WTI-Dubai and price discount offered for Middle East crudes.

The complete development of average price of the main crudes on the international market in March 2020 compared to February 2020 is as follows:

- Dated Brent is down by USD23.61 per barrel, from USD55.44 per barrel to USD31.83 per barrel.

- WTI (Nymex) is down by USD20.09 per barrel, from USD50.54 per barrel to USD30.45 per barrel.

- Basket OPEC is down by USD21.03 per barrel, from USD55.49 per barrel to USD34.46 per barrel.

- Brent (ICE) is down by USD21.75 per barrel, from USD55.48 per barrel to USD33.73 per barrel.

- ICP SLC is USD35.78 per barrel, down from USD57.18 per barrel in February 2020. (IY)

Head of Bureau of Communication, Public Information Services, and Cooperation

Agung Pribadi (08112213555)

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