Former OPEC member Indonesia is considering buying Russian crude for the first time in more than a decade, anonymous sources told Reuters.
Indonesia’s Pertamina has not bought crude oil from Russia since Russia’s invasion of Ukraine in February 2022, but has added Sokol and Urals crude to its purchase bid list for September 2024. Reuters reports that the last time an Indonesian oil company bought Sokol crude was more than a decade ago.
It remains to be seen whether Indonesia will join China and India in buying Russian crude. Reuters reports that one bid closed last week and the other closed on Monday, but the results have yet to be announced.
Indonesia is expected to have the strongest economic growth in 2024, behind Vietnam and the Philippines. Indonesia’s domestic crude oil production has fallen to below 600,000 barrels per day this year, while consumption has risen to more than 1.6 million barrels per day.
Despite Indonesia’s relatively neutral stance in international politics, it has announced that it will consider buying cheap Russian oil in 2022, but President Joko Widodo’s government appears to have concluded that buying Russian oil at a 30% discount to Brent crude prices is not worth the risks involved.
Rising oil imports have hit Indonesia’s trade balance, with crude oil and petroleum product imports increasing 17 percent month-on-month in June 2024. Rising prices for crude oil and petroleum products have also impacted the country’s trade balance. The Star reports that oil imports in June 2024 increased 47 percent year-on-year due to higher volumes and prices.
Despite the opportunity to buy Russian crude at discounted prices, Indonesia’s oil refineries are primarily focused on processing light crude, most of which is sourced from countries such as Saudi Arabia, Nigeria, Angola and Iraq.
Article by Tom Kool of Oilprice.com
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