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Today's Headlines OPEC
The coal price weakened at the end of trading on Monday (24/07). Coal futures (January 2018 contracts, the most active contract on the Rotterdam commodities exchange), fell 1.84 percent to USD $72.38 per metric ton on Monday, reversing from their performance on the preceding trading session (Friday 21/07) when coal prices rose 0.45 percent to USD $73.74 per metric ton.
Most Asian stocks are in the green zone on Monday morning (22/05), tracking Wall Street's performance on Friday where investors' attention shifted from recent political drama - related to US President Donald Trump - to good corporate earnings of Deere and Caterpillar. Meanwhile, rising crude oil ahead of the OPEC meeting on Friday (May 25, 2017) added positive sentiments to markets. Indonesia is again on track to finish at a new all-time record high.
While the Organization of the Petroleum Exporting Countries (OPEC)'s agreed to cut production (a deal that was joined by non-OPEC members, most notably Russia) at the organization's 171st meeting (held in Vienna on Wednesday 30 November), Indonesia decided to temporarily freeze its OPEC membership as it is reluctant to agree to a five percent cut in national crude oil production. Indonesian Energy and Mineral Resources Minister Ignasius Jonan announced this decision.
For the first time since 2008 the Organization of Petroleum Exporting Countries (OPEC) agreed to cut crude oil output on Wednesday (30/11) with especially Saudi Arabia ready to accept a big cut in national oil production. "Unlimited" crude oil production led to the supply glut that gave rise to persistently low oil prices and deflationary pressures. Asian stocks climbed on the back of this oil production cut. In early Asian trading on Thursday (01/12), gainers were led by mining, oil and coal producers.
The Organization of Petroleum Exporting Countries (OPEC) made a positive surprise move by agreeing to cut crude oil output for the first time in eight years. Reportedly, OPEC reached a preliminary agreement to limit oil production to 32.5 - 33.0 million barrels of oil per day (bpd), down from the current level of 33.5 million bpd. Although a formal agreement is yet to be reached (expected to happen in November) markets warmly welcomed the news: oil jumped 5 percent, while US energy stocks gained overnight. In Asia assets are extending the gains on Thursday (29/09).
Stock markets in Asia are plagued by the failure to see an 'oil freeze deal' reached at OPEC's oil talks in Doha over the weekend. Saudi Arabia announced it will not curtail its oil production as long as other oil producing countries do not curtail production as well. It specifically wants its geopolitical rival Iran to join the production freeze. However, Iran decided not to join the meeting and ruled out any output cuts after recently rejoining the international oil market (due to the lifting of sanctions). Iran indicated it is not cut any output before its oil production reaches the pre-sanction level.
Indonesia's benchmark Jakarta Composite Index (IHSG) rose 0.24 percent to 4,708.62 points, while the Indonesian rupiah appreciated 0.52 percent to IDR 13,439 per US dollar (Bloomberg Dollar Index) on Monday (22/02) amid mostly rising emerging market stocks and appreciating emerging market currencies. Investor appetite for riskier assets was triggered by higher global oil prices and rallying Chinese shares (brought about by optimism after the appointment of a new chairman of the China Securities Regulatory Commission.
Despite winter having arrived, global oil prices are still declining. Today (21/12), Brent crude prices plunged to the lowest level since 2004 on persistent concern about a global supply glut as the Energy Information Administration reported that US crude oil supplies rose 4.8 million barrels to 490.7 million in the second week of December, while the OPEC's production rate stood at 31.7 million barrels per day (bpd) in November 2015. Meanwhile, oil demand is expected to fall in 2016. For example, oil consumption in the USA is projected to fall to 1.2 million bpd next year, from 1.8 bpd in 2015.
On 13 December 2015, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website over the last seven days. Most of the topics involve economic matters such as updates on the performance of Indonesian stocks and the rupiah, income inequality, the budget deficit, IPOs on the Indonesia Stock Exchange, but also political topics such as regional elections.
Per 4 December 2015 Indonesia officially rejoined the Organization of the Petroleum Exporting Countries (OPEC), seven years after the country had voluntarily exited the organization as it had turned in to a net oil importer. On the 168th meeting of the OPEC, held in Vienna (Austria), OPEC President (and Nigeria's Oil Minister) Emmanuel Ibe Kachikwu welcomed Indonesia back into the organization. At the meeting Indonesia was represented by Indonesian Minister of Energy and Mineral Resources Sudirman Said.
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Besides the novel coronavirus (COVID-19) outbreak, another big news story in March 2020 was the massive decline of global crude oil prices. Not only is the price of oil under pressure because of the enormous slowdown in economic activity as various governments have imposed restrictions (such as travel bans) in an attempt to curb the further spread of the coronavirus, but there also emerged big tensions between some of the world’s biggest oil producers that led to tumbling oil prices.
The government of Indonesia proposes to cut the state revenue target by IDR 88 trillion (approx. USD $6.5 billion) in the Revised 2016 State Budget. Indonesian Finance Minister Bambang Brodjonegoro announced the government has sent the proposal to the House of Representatives’ Budget Committee (Banggar) on Thursday (02/06). Expectations of lower government revenue is the result of weaker-than-estimated tax collection, the lower-than-initially-assumed Indonesian crude oil price as well as the lower-than- estimated oil and gas production in Indonesia.
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.
Indonesia’s crude oil production is expected to increase starting from mid-March 2015 as new oil fields will start to come online this month, including the Bukit Tua oil field (part of the Ketapang block in East Java and which is operated by Petronas Carigali). Over the past two decades Indonesia oil output has declined drastically amid maturing oil fields and the lack of exploration as well as other investments in Indonesia’s oil & gas sector. In 2014, Indonesia produced an average of 794,000 barrels of oil per day (bpd).
General Director of Oil and Gas at the Indonesian Ministry of Energy and Mineral Resources Edy Hermantoro said at the 38th IPA Convention and Exhibition on Friday (23/05) that the Indonesian government plans to tender a total of 21 blocks of oil and gas in a first bidding round in 2014. This involves 13 conventional oil and gas blocks and eight non-conventional (shale) oil and gas blocks. The government expects that these oil and gas blocks will add 3.5 billion barrels of oil and 107.7 trillion cubic (tcf) of gas resources.
Imports of oil will accelerate to 1.6 million barrels per day (bpd) by 2020 if fuels continue to be subsidized by the Indonesian government. This development will seriously burden Indonesia's trade balance (and current account). In 2013, Indonesia posted a trade deficit of USD $12.6 billion in the oil & gas sector. Due to improved performance in the non-oil & gas sector, the overall trade deficit was kept at USD $4.06 billion. Besides placing downward pressure on the rupiah exchange rate, expensive subsidies also burden the state budget.
The government of Indonesia will revise its crude oil production target in 2014 to 820 thousand barrels per day (bpd), down from its previous target of 870 thousand bpd. The main reasons for this downgrade are the country's mature oil fields in combination with a lack of exploration as well as other investments in this sector. Indonesia, once an important oil exporting country and member of the OPEC, has seen its oil output decline drastically over the last decade, thus becoming a net importer as the country's domestic consumption continues to rise.
It is official. As of Saturday 22 June 2013, after months of uncertainty and speculation, the price of Indonesia's subsidized fuel has finally been raised. Starting from 0.00 am (midnight) on Saturday, all Indonesians have to pay a higher price of gasoline and diesel. Gasoline has been raised by 44 percent to IDR 6,500 (USD $0.66) and diesel by 22 percent to IDR 5,500 (USD $0.56) per liter. The minister of Energy and Mineral Resources, Jero Wacik, made the announcement on late Friday evening, after which the hike took effect immediately.
This year, Indonesia will have to face declining production numbers in its oil and gas sector. Gas output is assumed to decline by 14.77 percent compared to last year, while oil output will reach similar levels as in 2012, provided that there are no disruptions due to bad weather and leakages (a prerequisite that will be hard to meet).
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