Jakarta, CNBC Indonesia – Indonesia is one of the countries that is worried about the geopolitical tension between Russia and Ukraine. It is feared that the conflict could become a third world war, which will have an impact on commodity prices, including world crude oil prices.
Quoted from CNBC, the price of Brent crude oil on Tuesday (1/2/2022) closed at the level of US $ 91.21 per barrel. Meanwhile, the price of US West Texas Intermediate crude oil reached US$ 88.15 per barrel. Both prices were recorded as the highest levels since October 2014.
The National Energy Council (DEN) and the government are also monitoring the geopolitical situation between Russia and Ukraine. DEN member Satya Widya Yudha stated that Indonesia really needed to pay close attention to the geopolitical conflict.
Because, it is not yet known whether this global geopolitical tension will last for how long or whether Russia will really invade Ukraine.
“Bu Sri Mulyani (Minister of Finance of the Republic of Indonesia) is also worried that because this conflict will lead to a third world war. We want to see, we will act. At least from the side of the government and the National Energy Council to monitor this, because we want that if we are in an energy crisis “said Satya.
He understands the concerns of the Minister of Finance of the Republic of Indonesia Sri Mulyani, because the conflict between Russia and Ukraine is also one of the causes of the increase in world oil prices. Not to mention, the current assumption of oil prices in the 2022 State Revenue and Expenditure Budget (APBN) is far from the current world oil price or only reaches US$ 63 per barrel.
As is known, Indonesia has a fairly large oil dependence on foreign countries. Among them are 27% imported fuel oil, 56% gasoline, and 85% LPG.
With Indonesia’s dependence on imports, especially oil and gas, the increase in world oil prices has put pressure on Indonesia. This means that state revenues will decrease with the deficit. Which of course will have an impact on the state spending factor.
“So it affects the spending factor because a change in one macro assumption changes, for example yesterday it was US$ 63 per barrel and then it went up, for example, it turned out to be US$ 80 even though it is now at US$ 91, but we don’t know the average in 2022,” said Satya.
Let alone a high increase, said Satya, an increase in oil prices of only US$ 1 per barrel could cause a deficit of trillions of rupiah for Indonesia. “So, for example, if it shoots up to US$ 10 dollars, it will have a fairly large deficit in our budget,” he continued.
Understand, said Satya, world oil prices are happening day by day However, the government still needs to pay attention. Thus, the occurrence of geopolitical problems in Ukraine and Russia and the difficulty of the world in finding new oil and gas reserves could give Indonesia a position on world oil.
“In order to maintain our production, for example, we cut permits, regulations that hinder investment, it also needs to be done so that investment in the oil and gas sector remains attractive. So that it can meet, or at least reduce, our oil and gas imports,” said Satya.
“So we really need to pay close attention to this so that what is happening, the world’s geopolitical tensions at least does not have an impact on the domestic market,” said Satya.
However, Satya admits that this is not an easy thing to do. The reason is that oil prices are determined by market movements so that Indonesia only receives the impact of these movements.
(pgr/pgr)
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