JAKARTA: The oil price war between Saudi Arabia and Russia can be a mixed blessing for Indonesia.
Saudi Arabia started the current price war with Russia by slashing its selling prices and pledging to boost supply amid falling demand due to the Covid-19 outbreak.
Finance Minister Sri Mulyani Indrawati said with the weakening economy due to the outbreak, Indonesia could benefit from imports as a result of lower prices, according to The Jakarta Post.
Brent crude futures fell to its lowest since 1991 on Monday, by US$14.25 or 31.5 per cent, to US$31.02 per barrel.
Current circumstances might ease state oil company Pertamina’s import burden, she said, and the price of energy would be relatively low.
“However, this could lead to bigger uncertainty in the capital market.”
Share markets tumbled on Monday as panicked investors fled to bonds to hedge the economic shock of the coronavirus and the oil price slump.
Sri Mulyani added that the government would continue to monitor the low oil price situation and its potential impact on the state budget.
Energy and Mineral Resources Ministry acting oil and gas director-general Ego Syahrial said Indonesia wanted to make the most out of falling crude oil prices by fulfilling domestic demand without widening the country’s trade deficit.
Ego said the government expected Pertamina to “buy as much oil as it can”.
“Oil prices have plunged, we should enjoy it. We have many tanks to fill,” he said.
According to Reuters, Saudi Arabia was attempting to punish Russia for balking on Friday at production cuts proposed by the Organisation of the Petroleum Exporting Countries (Opec).
Saudi Arabia planned to boost output to above 10 million barrels per day next month after the current supply deal between Opec and Russia, known as Opec+, expires at the end of this month.