Jakarta (Indonesia Window) – Indonesian Crude Price (ICP) fell 1.67 U.S. dollars from 81.80 dollars per barrel in October to 80.13 dollars per barrel in November 2021, according to the Ministry of Energy and Resources.

In November, the average price of Sumatran Light Crude (SLC) dropped 1.37 dollars per barrel from the previous month of 81.52 dollars per barrel to 80.15 dollars per barrel.

"Several factors have influenced the decline in crude oil prices on the international market, including the plans of the United States, China, Japan, India, Britain and South Korea to release their strategic oil reserves to deal with high oil prices," the Indonesian Oil Price Team said here on Friday (Dec. 10).

Strategic oil reserves to be released into the market are estimated at 71 million barrels.

Other factors affecting oil prices are the soaring number of COVID-19 cases in Europe with several countries such as Austria, the Netherlands and Germany deciding to go into lockdown, causing fears of a decline in economic activities and demand for crude oil.

"In addition, there is concern with the emergence of new variant Omicron in the southern African region," according to the team.

The International Energy Agency (IEA) in its November 2021 report predicted there would be an oversupply in 2022, estimating that crude oil supplies from non-OPEC countries would increase by two million barrels per day (BOPD) compared to the end of 2021.

The report also predicted that global crude oil demand would not reach pre-pandemic levels until the end of 2022, with the forecast for crude oil demand in 2022 only increasing by 1.4 million BOPD compared to the end of 2021.

Meanwhile, the global crude oil production increased by 1.4 million BOPD in October 2021 and would increase again in November and December 2021, including from production in the Gulf of Mexico following the implications of Hurricane Ida and OPEC+ which would gradually increase production quotas, IEA said.

Significant increase in crude oil production also came from Brazil, Canada, Norway, England and Guyana.

Meanwhile, OPEC in its report said that the decline in world crude oil prices during November 2021 was also due to a decrease in global crude oil demand growth projection in 2021 by 160,000 BOPD compared to that in the previous month, to 5.65 million BOPD. Thus, the projected global crude oil demand in 2021 would be 96.44 million BOPD.

"The global crude oil demand projection in 2022 also decreased by 160,000 BOPD compared to that in the previous month, to 100.59 million BOPD," said the Oil Price Team in the report.

In addition, the strengthening of the U.S. dollar against a number of currencies reached a record high in the last 16 months in line with positive U.S. economic data.

In the Asia Pacific region, the decline in crude oil prices was caused not only by those factors but also by China's crude oil imports which fell to their lowest level in three years due to high oil prices and restrictions on import quotas for independent refineries.

Other declining factors are the rebound in COVID-19 infection cases in several Asian countries such as Singapore, South Korea and China, as well as the projected decline in demand for crude oil from China and India due to lockdowns and sluggish economic growth.

Reporting by Indonesia Window