Geopolitical Factors Lift January ICP to USD85.89 per Barrel

MINISTRY OF ENERGY AND MINERAL RESOURCES

THE REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 62.Pers/04/SJI/2022

Date: 7 February 2022

Geopolitical Factors Lift January ICP to USD85.89 per Barrel

The Indonesian Ministry of Energy and Mineral Resources (EMR) has set the Indonesian Crude Price (ICP) for January 2022 at an average of USD85.89 per barrel, surging by USD12.53 per barrel compared to the December 2021 ICP of USD73.36 per barrel.

"The rise is in accordance with Decision of Minister of EMR Number 11.K/MG.03/DJM/2022 on Indonesian Crude Oil Prices of January 2022, which was signed on February 2nd, 2022," said Head of Bureau of Communication, Public Information Services, and Cooperation of the Ministry of EMR, Agung Pribadi, in Jakarta on Monday (7/2).

According to Agung, the increase in the January ICP has been influenced by geopolitical dynamics in a number of countries which boost crude oil prices on the international market. "A number of countries are in the middle of political turmoil, such as the conflict between Ukraine and Russia," explained Agung.

Meanwhile, Kazakhstan, an OPEC+ country which produces 1.6 million barrels of oil per day, is experiencing logistical problems which will potentially reduce the country's production after fuel price hike sparked protests. Additionally, the United Arab Emirates (UAE), OPEC's third-highest oil producer, suffered deadly drone and missile attacks by Yemeni Houthi rebels on Mussafah fuel depot, ADNOC, and the UAE international airport.

Moreover, Libya only produces 700,000 barrels of crude oil per day from potential production of approximately 1.2 million barrels per day.

"Libya has experienced the lowest oil production in 14 months due to blockades on the main oil fields in the west and repairs to the pipelines connecting the Samrah and Dahra Fields to the Es Sider terminal, which has a capacity of 350,000 barrels per day," said Agung.

Another factor is a blast near the pipeline that connects Kirkuk in northern Iraq to the port of Ceyhan in Turkey. The pipeline has a capacity of 450,000 barrels per day, so the explosion has added to global market concerns about potential supply disruption.

Regarding the world's oil demand, the International Energy Agency (IEA) has reported that in January 2022, the projected growth in world's oil demand in 2021 and 2022 increases by 200,000 barrels per day, to 5.5 million barrels per day in 2021 and 3.3 million barrels per day in 2022, due to relaxation of Covid restrictions.

"The OPEC+ Advisory Committee has reported that Omicron's implications for the global demand growth will be limited. In fact, the Secretary General of OPEC said that the world's oil demand will return to a pre-pandemic level by the end of 2022," Agung said.

According to the IEA, OPEC+ oil production in December 2021 was 790,000 barrels per day lower than the target. Meanwhile, the US Energy Information Administration (EIA) in its weekly report informs the stock of the United States at the end of January 2022 is lower compared to the stock at the end of the previous month, i.e. crude oil stock dropped by 1.7 million barrels to 416.2 million barrels, while distillate stock fell by 1.7 million barrels to 125.2 million barrels.

As stated by the Joint Organization Data Initiative, Saudi Arabia's crude oil stock dipped by 4.43 million barrels to 132.38 million barrels in November 2021, a record low in the last three years. "The oil price surge was also influenced by ICE Brent backwardation, the highest in the last eight years," explained Agung.

For the Asia-Pacific region, energy information provider RIM Intelligence has reported that the increase in crude oil prices was also influenced by Singapore's crude throughput at the end of January 2022, which picked up by 1.4% compared to production at the end of December 2021, to 1.17 million barrels per day or 83.5% of the national capacity of 1.39 million barrels per day.

The complete development in the average price of main crudes in January 2022 is as follows:

- Dated Brent soars by USD13.12 per barrel, from USD74.10 per barrel to USD87.22 per barrel.

- WTI (Nymex) rises by USD11.29 per barrel, from USD71.69 per barrel to USD82.98 per barrel.

- Brent (ICE) increases by USD10.77 per barrel, from USD74.80 per barrel to USD85.57 per barrel.

- Basket OPEC is up by USD11.63 per barrel, from USD73.49 per barrel to USD85.13 per barrel. (IY)

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

Agung Pribadi (08112213555)

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