OPEC+ Cuts Production, June ICP Boosts to USD 36.68 per Barrel

MINISTRY OF ENERGY AND MINERAL RESOURCES

REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 233.Pers/04/SJI/2020

Date: 4 July 2020

OPEC+ Cuts Production, June ICP Boosts to USD 36.68 per Barrel

The rising prices of the main crudes on the international market in June 2020 compared to prices in May 2020 has contributed to an increase in Indonesia Crude Price (ICP). Based on the calculation by the Indonesia's Crude Price Team, June ICP has surged by USD 11.01 per barrel, from USD 25.67 per barrel to USD 36.68 per barrel.

The SLC price also rises by USD 11.60 per barrel, from USD 27.44 per barrel to USD 39.04 per barrel.

The Indonesia's Crude Price Team stated that the price hike of the main international crudes has been caused among others by OPEC+ deal to continue production cut of 9.7 million Barrels of Oil per Day (BOPD) until July 2020.

"OPEC+ also ensures the compliance of its members to support the production cut according to the quota of each country," stated the Price Team.

Another factor is the dwindling crude exports from Russia in June 2020, hitting a 10 year low.

Additionally, the International Energy Agency (IEA) in its June report has estimated the crude demand in 2020 is 91.7 million BOPD, increasing by 500 thousand BOPD which has exceeded market expectation. Fuel demands have risen in several large cities in the world, back to the demand level in 2019, with several countries easing their lockdown policy.

The Price Team informed that OPEC, in its June report, has estimated the crude production from non-OPEC countries in 2020 of 61.8 million BOPD, down by 3.8 thousand BOPD compared to the May estimate, in line with production decline in several countries such as Russia, Oman, Mexico, Kazakhstan, and Azerbaijan.

"Oil rigs usage in the US has slumped by 71% (690 units) in 2020, to 279 oil rigs, because oil wells have stopped production due to low oil price, weakening oil demand, and limited storage tanks for crudes," the Price Team added.

According to the report of Energy Information Administration (EIA), higher international crude price has also been contributed by lower gasoline stocks in the US in June 2020, down by 2.5 million barrels to 255.3 million barrels, compared to stocks in May 2020.

Finally, the rise in the US Purchasing Managers' Index (PMI) and several European countries has boosted the market's positive sentiment about improvement in global economy.

For Asia Pacific, higher crude price is also the impact of declining oil supplies from Saudi Arabia and Iraq along with better compliance of OPEC+ members on production cut.

Other reasons include higher production rate of China and South Korea refineries, significantly growing demand for crude in China and India, and the easing of the lockdown policy by several Asian countries to move the economy.

The complete price development of the main international crudes is as follows:

- Dated Brent is up by USD 11.09 per barrel, from USD 28.98 per barrel to USD 40.07 per barrel.

- WTI (Nymex) is up by USD 9.78 per barrel, from USD 28.53 per barrel to USD 38.31 per barrel.

- Basket OPEC is up by USD 11.82 per barrel, from USD 25.17 per barrel to USD 36.99 per barrel.

- Brent (ICE) is up by USD 8.36 per barrel, from USD 32.41 per barrel to USD 40.77 per barrel. (IY)

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

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