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Govt anticipates possible oil price hike as US-Iran conflict intensifies

Myanmar’s draft oil and gas bill jeopardises next bidding round. The Myanmar Times. Sketched by the Pan Pacific Agency.

Pan Pacific Agency | COMMUICATION AGENCY FOR PACIFICA REGIONS

JAKARTA, Jan 6, 2020, The Jakarta Post. The strained diplomatic relations between the United States and Iran following the killing of a top Iranian general by the US military would likely affect Indonesia’s national economic growth as oil prices are bound to surge in the wake of the latest development, a minister has suggested, The Jakarta Post reported.

State-Owned Enterprises (SOE) Minister Erick Thohir said that, although such an event was unpredictable, the country would do well to mitigate the repercussions as it concerned national economic stability.

“The world economy has always fluctuated – it’s unpredictable. The situations in the Middle East, especially what has happened between the US and Iran, will have an impact on Indonesia – specifically on oil prices,” Erick said on Sunday as quoted by tempo.co.

The US announced on Friday that it had killed a top Iranian general — the commander of the Iranian Quds Forces — in a strike on Baghdad’s international airport, in which the deputy chief of Iraq’s powerful Hashed al-Shaabi paramilitary force was also killed.

AFP reported that the US had launched another air strike in Iraq on Saturday.

Erick said the government had taken steps to anticipate a possible rise of oil prices amid the heated conflict between the US and Iran. The government had, for example, focused on implementing the B30 biodiesel program, he said.

“We have anticipated [the development] since a few months ago. Our measures included the implementation of the B30 program, which is expected to limit our reliance on oil imports,” he said.

Other anticipatory measures would also entail purchasing oil directly from producers themselves without any intermediaries to reduce costs, he said.

“We’ve been directly engaged in a tender with oil producers, including American oil companies, without the assistance of any trader in order to cut down on unnecessary costs,” he said.

The government is currently importing oil directly from French multinational oil and gas company Total, saving up to US$6 dollar per barrel, Erick said.

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