Indonesia's May 2023 Crude Oil Reference Price Plummets

The Indonesian Ministry of Energy and Mineral Resources (ESDM) has set the average price of Indonesian Crude Price (ICP) for May 2023 at US$70.12 per barrel.

This price plummeted by US$9.22 per barrel compared to April 2023's US$79.34 per barrel.

The Ministry of ESDM cited numerous factors influencing this decline, primarily stemming from international markets.

These include market concerns about the global economic situation due to inflation, interest rates, and high US debt, potentially leading to a global recession and decreased oil demand.

The US Federal Reserve even raised its benchmark interest rate by 0.25% to 5-5.25% on May 3, 2023, to curb inflation.

Furthermore, the International Monetary Fund (IMF) reported a slowdown in economic growth in 2023 in the Middle East, North Africa, and Central Asia.

Another factor contributing to the May 2023 crude oil price decline is Platts' report, which revised down the projected global crude oil demand growth for 2023 by 0.17 million barrels per day compared to the previous month's projection.

In the Asia-Pacific region, the crude oil price decline was also influenced by China's crude throughput reaching its lowest point in four months. The team noted that offline refineries reached 1.2 million barrels per day.

China's oil imports in April 2023 also fell by 16.2% to 10.36 million barrels per day compared to March 2023.

Additionally, China's Manufacturing Purchasing Manager Index (PMI) in April 2023 dropped to 49.2 points compared to 51.9 points in March 2023.

Other countries, such as South Korea, the world's fourth-largest oil importer, experienced a decrease in imports of 2.6 million barrels per day in April 2023 (year-on-year/yoy) to 78.04 million barrels.

"There was a decrease in demand in May 2023 in Japan, triggered by the shutdown of several refineries, including Cosmo Oil with a capacity of 102,000 barrels per day, Sakai with a capacity of 100,000 barrels per day, and ENEOS with a capacity of 141,000 barrels per day," said the team.

Furthermore, regarding global crude oil supply, the Ministry of ESDM explained the following:

* An expected increase in production from OECD countries in 2023 of 1.5 million barrels per day compared to last year, dominated by the US, Norway, and Canada.
* An expected increase in oil supply from non-OECD countries, dominated by Latin America, Kazakhstan, and China, with annual growth in 2023 of 0.4 million barrels per day, 110,000 barrels per day, and 70,000 barrels per day, respectively.
* OPEC's May 2023 report revised upward the projected production of non-OPEC countries compared to last month's publication in the second quarter of 2023 by 0.18 million barrels per day to 66.71 million barrels per day.

(Also read: Global Supply Down, Indonesian Crude Oil Price Strengthens in April 2023)