Indonesian government remains wary of hike in global oil prices

Indonesian government remains wary of hike in global oil prices

Finance Minister Sri Mulyani at the Dhanapala Building, Jakarta, Tuesday (17/9/2019). (ANTARA/Dewa Wiguna/ AK)

Jakarta (ANTARA) - The Government of Indonesia maintains a guarded stance over the rise in global oil prices as an outcome of the attack on Saudi Arabia's oil facilities that impact its production.

"We should be heedful of the medium- to long-term effects, specifically the dynamics of security and political stability in the Middle East," Sri Mulyani stated at the Dhanapala Building, Jakarta, Tuesday.

Sri Mulyani noted that the government should be sentient of the medium- to long-term impacts since the spike in global oil prices will augment global economic uncertainty.

Furthermore, she remarked that Saudi Arabia is the world's largest oil exporter, with rich oil reserves.

The attack siphoned out half of its output of 5.7 million barrels per day (bpd), or the equivalent to five percent of the global supplies.

However, Sri Mulyani believes in watching the situation closely, including awaiting a response from Saudi Arabia and other nations, including the United States and Iran.

Related news: Geopolitical issues spike ICP to US$68.31 per barrel

Speaking in connection with domestic matters, the assumption of the Indonesian crude oil prices is lower, at 63 US dollars per barrel in the temporary posture of the 2020 state budget plan.

Reuters had earlier reported that oil prices ended nearly 15 percent higher on Monday, with Brent clocking its highest jump in over three decades in the midst of record trading volumes, after an attack on Saudi Arabian crude facilities reduced the kingdom’s production in half and fueled fears of retaliation in the Middle East.

The attack raised uncertainty in a market that had become comparatively subdued in recent months and currently faces the loss of crude from Saudi Arabia, traditionally the world’s supplier of last resort. A gauge of the oil-market volatility hit its highest level since December of last year, and trading activity showed investors expect higher prices in coming months.

Brent crude, the international benchmark, settled at $69.02 a barrel, rising $8.80, or 14.6 percent, its biggest single-day percentage gain since at least 1988. Brent futures witnessed over two million contracts traded, an all-time daily volume record, Intercontinental Exchange spokeswoman Rebecca Mitchell noted.

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