Jakarta (Indonesia Window) – The average Indonesian Crude Price (ICP) in December 2021 decreased by 6.77 U.S. dollars per barrel from 80.13 dollars per barrel to 73.36 dollars per barrel.

The decline was due to concerns about demand triggered by the rapid global rise following the spread of the Omicron variant, as well as rising oil supplies from Libya.

"The increase in micron cases in a number of countries has a major impact on market behaviors. Restrictions on economic activities have resulted in a decline in global crude oil demands," Indonesian Ministry of Energy and Mineral Resources’ spokesperson Agung Pribadi said here on Tuesday (Jan. 11).

On the other hand, inflation, strategic reserves release, and the continued increase in OPEC+ production as well as the strengthening of the U.S. dollar against other major world currencies led to a decline in investors’ interest in oil commodities to the lowest level in several years and prompted profit-taking while prices were still high.

Meanwhile, the International Energy Agency (IEA) in its December 2021 report stated that global crude oil supplies exceeded the demands, mainly due to rising the U.S. production following the increase in drillings and OPEC+ productions by 450,000 barrels per day.

OPEC reported that demands for oil in the fourth quarter of 2021 are slightly lower mainly due to the COVID-19 restriction measures in Europe and their potential impacts on transportation fuel demands, as well as the increasing number of Omicron variant cases.

In 2021 the total world oil demands were 96.63 million barrels per day on an annual basis.

The decline in international crude oil prices was also influenced by the Bank of England announcing an unexpected increase in interest rates (this decision was the first among the developed countries of the G7 group to conduct monetary tightening since the pandemic) after the U.S. Federal Reserve indicated the potential for accelerated reductions in fiscal stimulus and raise interest rates early to tackle inflation.

These indications make the U.S. dollar more attractive to investors compared to the equity market.

A report by the Indonesian Crude Oil Price Team estimated that global refinery throughput in the fourth quarter of 2021 would be revised down by 400,000 barrels per day compared to the November 2021 report, to an average of 78.7 million barrels per day.

In the Asia Pacific region, the decline in crude oil prices was caused not only by these factors, but also by continued expectations for the release of China's strategic oil reserves, the decline in economic growth in the region (especially in China and India), as well as the decline in crude oil imports in China and Japan.

The development of the average price of major crude oil on the international market in December 2021 compared to November 2021 is as follows.

Dated Brent fell by 7.34 dollars per barrel from 81.44 dollars per barrel to 74.10 dollars per barrel.

WTI (Nymex) fell by 6.96 dollars per barrel from 78.65 dollars per barrel to 71.69 dollars per barrel.

The OPEC basket fell by 6.88 dollars a barrel from 80.37 dollars a barrel to 73.49 dollars a barrel.

Brent (ICE) fell 6.05 dollars per barrel from 80.85 dollars per barrel to 74.80 dollars per barrel.

Reporting by Indonesia Window