This is the Sensitivity of Oil Price Increases to the 2018 State Budget

Oil prices are crucial to Indonesia's economy. This is reflected in the macroeconomic assumptions used in the preparation of the State Budget (APBN), which always incorporates oil prices. Fluctuations in oil prices of US$1 per barrel will affect state revenue and expenditure.

In the 2018 APBN, the sensitivity of a US$1 per barrel increase in oil prices will affect an increase in state revenue in the range of Rp 3.4-3.9 trillion and also affect an increase in state expenditure of Rp 2.4-3.7 trillion. Rising oil prices will boost government revenue from the oil and gas sector. However, higher oil prices will also increase state expenditure due to increased fuel subsidies and oil-based budget allocations.

The Indonesian Crude Price (ICP) in next year's APBN is pegged at US$48 per barrel, assuming that the price of WTI crude oil will reach US$49.58 per barrel and Brent crude oil will reach US$51.58 per barrel. The US Energy Information Administration (EIA) and the Organization of the Petroleum Exporting Countries (OPEC) predict that global crude oil production next year will still exceed demand. According to the EIA, global oil demand in 2018 will only reach 100 million barrels per day, while oil production will reach 100.19 million barrels per day.