December 2021 ICP Drops to USD73.36 per Barrel

MINISTRY OF ENERGY AND MINERAL RESOURCES

REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 18.Pers/04/SJI/2022

Date: 11 January 2022

December 2021 ICP Drops to USD73.36 per Barrel

The government has set the Indonesian Crude Price (ICP) for December 2021 at an average of USD73.36 per barrel, declining by USD6.77 per barrel from the previous month average of USD80.13 per barrel. The decline has among others been triggered by market players' concern about market instability due to soaring global cases of Covid-19 Omicron variant and higher supplies from Libya.

"The increasing number of (Covid-19) Omicron cases in a number of countries has a significant impact on market behavior. Restrictions on economic activities have resulted in a decline in global crude oil demands," said Head of Bureau of Communication, Public Information Services, and Cooperation of the Ministry of Energy and Mineral Resources, Agung Pribadi, on Tuesday (11/1).

On the contrary, inflation, the release of strategic reserves, and the continued increase in OPEC+ production as well as a stronger US Dollar exchange rate against the world's other major currencies have reduced investor interest in oil commodities to the lowest level in several years and encouraged profit taking when prices were high.

In terms of oil supply/production and stock, the International Energy Agency in its December 2021 report stated that global crude oil supply exceeds demand, mainly due to higher production in the US as a result of increased drilling activity and a boost in OPEC+ production of 450,000 barrels per day.

In terms of oil demand, OPEC reported that demands in Q4 2021 were slightly lowered, especially to take into account the measures to contain the spread of Covid-19 in Europe and the potential impact these measures pose on the demand for transportation fuels, as well as the emergence of the Covid-19 Omicron variant. The world's total oil demand in 2021 hit 96.63 million barrels per day.

The decline in international crude prices was also influenced by the Bank of England announcing an unexpected increase in interest rates. This decision is the first among the G7 economies, which have tightened their monetary terms since the Covid-19 pandemic. Previously, the US Federal Reserve indicated the potential for accelerating fiscal stimulus cuts and raising interest rates early to cope with inflation. These indications have made the US Dollar more attractive to investors compared to the equity market.

According to the report of the Indonesian Crude Price Team, Rystad Energy has revised the global refinery throughput in Q4 2021 down by 400,000 barrels per day compared to the November 2021 report, to 78.7 million barrels per day on average.

For the Asia Pacific region, the decline in crude prices was caused not only by the above factors but also by continued expectations for the release of China's strategic oil reserves, the decline in the economic growth in the Asia Pacific region, especially in China and India, as well as decreased crude imports by China and Japan.

The December 2021 ICP is set out in Decision of Minister of EMR Number 2.K/MG.03/DJM/2022 of 3 January 2022.

The developments in main crudes' average prices at the international market in December 2021 compared to those in November 2021 are as follows:

a. Dated Brent is down by USD7.34 per barrel, from USD81.44 per barrel to USD74.10 per barrel.

b. WTI (Nymex) slides by USD6.96 per barrel, from USD78.65 per barrel to USD71.69 per barrel.

c. Basket OPEC lowers by USD6.88 per barrel, from USD80.37 per barrel to USD73.49 per barrel.

d. Brent (ICE) weakens by USD6.05 per barrel, from USD80.85 per barrel to USD74.80 per barrel. (IY)

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

Agung Pribadi (08112213555)

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