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Reasons Why Indonesian Crude Oil Prices Dropped to US$ 79.32 per Barrel

Holiday Ayo - The Ministry of Energy and Mineral Resources (ESDM) revealed that the average price of Indonesian crude oil (ICP) fell in June 2024 to US$ 79.31 per barrel from the previous month, namely May 2024, of US$ 79.78 per barrel. 

This is based on the Decree of the Minister of Energy and Mineral Resources Number 327.K/MG.03/DJM/2024 concerning Crude Oil Prices for June 2024 which was issued on July 1 2024. 


“The ICP for June 2024 is set at USD 79.31 per barrel, down by USD 0.47 from the average price in May 2024 which was at USD 79.78 per barrel," said the Head of the Communications, Public Information Services and Cooperation Bureau (CLICK) Ministry of Energy and Mineral Resources Agus Cahyono Adi in Jakarta, quoted on Sunday (7/7). 


In accordance with the analysis of the Indonesian Crude Oil Price Team, Agus explained, the decline in the main international crude oil prices was influenced, among other things, by market doubts about world demand for crude oil. 


One indicator is the increase in crude oil stocks in the United States, which rose by 4.8 million barrels to 460.7 million barrels. 


Meanwhile, United States gasoline stocks increased by 3.0 million bbl to 233.9 million bbl compared to the previous month's stocks. 


Another factor that influences international markets is profit-taking which occurs when crude oil prices strengthen. 


This situation was triggered by concerns over oil supply disruptions due to geopolitical upheaval in Russia and the Middle East. 


Furthermore, market concerns also arise from the economic condition of the United States. The US Central Bank's delay in reducing interest rates strengthened the US Dollar exchange rate, which then made investors prefer to shift their investments from the commodity market to the US Dollar. 


“Apart from that, there are market concerns about increasing crude oil supplies, because the results of the OPEC+ meeting in early June 2024, among other things, agreed to start reducing production cuts in early Q4 2024," added Agus. 


Data from the International Energy Agency (IEA) also shows that in June 2024, world oil supplies will increase by 520 thousand barrels per day, reaching a total of 102.5 million barrels per day. 


However, the IEA also lowered its projection for world oil demand growth for 2024 by 100 thousand barrels per day, to 960 thousand barrels per day.

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