Although oil prices somewhat recovered from 12-year lows on Friday (08/01) on China's rebounding stock market there is concern that Indonesia will not achieve its 2016 oil lifting target as the country's oil producers become less eager to boost production rates amid unattractive oil prices. Yesterday, Brent oil fell to USD $32.16 per barrel - the lowest level since 2004 - after China devalued its yuan and Chinese stocks plunged over 7 percent causing the circuit-breaking mechanism to kick in and even causing a global stock selloff.

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After declining below the USD $30 per barrel level in February 2016, crude oil prices have shown a rising trend, touching the USD $50 per barrel level. One of the companies that hopes this rising trend will continue is Indonesian company Logindo Samudramakmur, a company that provides offshore support vessels for oil & gas exploration. However, when oil prices are low, oil and gas exploration is limited. Moreover, existing clients request for lower prices of Logindo Samudramakmur's services.

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In the past week, the global crude oil price has increased considerably due to geopolitical tensions in Iraq which can disturb oil supplies from the Middle East. Up to the end of 2014, provided that no exceptional developments occur, the oil price is expected to range between USD $105-110 per barrel. Meanwhile, the Indonesian government announced that, despite the higher oil price putting pressure on the government’s budget balance, it will not increase prices of subsidized fuels this year.

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