Jakarta (Indonesia Window) – The average Indonesian Crude Price (ICP) in May 2022 was recorded at 109.61 U.S. dollars per barrel, or an increase of 7.10 dollars per barrel compared to the previous month's price of 102.51 dollars per barrel.

The Indonesian Crude Oil Price Team revealed that the price increase was due to the European Union's embargo against Russia’s crude oil when the supply is limited amid rising demand for oil and jet fuel ahead of driving seasons in the United States and Europe.

"The European Union's agreement on the crude oil embargo has raised market concerns that will further disrupt global crude oil supplies," the Indonesian Crude Oil Price Team said in a statement received here on Monday.

In addition, the limited supply of global crude oil was also caused by the production of the Organization of the Petroleum Exporting Countries and its allies, collectively called OPEC+, which was booked at 1.5 million barrels of oil per day (BOPD), or lower than the production quota.

The May OPEC report pointed out that there was an increase in the projected growth in the world crude oil demand in 2022 of 3.4 million BOPD resulting from improving global economic activity, mobility and industry.

The demand for OPEC crude oil has increased by 100,000 BOPD to 29 million BOPD or 800,000 BOPD higher than that in 2021.

The International Energy Agency in its May 2022 report noted that the world oil demand for this year was expected to increase by an average of 1.8 million BOPD to 99.4 million BOPD.

Meanwhile, U.S. refineries increased production to the highest 93.2 percent since December 2019 to meet high demand as exports of refined petroleum products increased.

The United States Energy Information Administration's weekly stock report for May 2022 showed a decline in gasoline stocks of 8.9 million barrels to 219.7 million barrels, the lowest since December 2021, when compared to April 2022.

Oil prices were also affected by geopolitical tensions in the Middle East when Iran seized two Greek tankers in retaliation for the United States' seizure of Iranian crude in Greek waters. This raises concerns about the disruption of crude oil supplies via the Strait of Hormuz through which a third of the world's crude oil trades pass.

The increase in ICP was also influenced by the declining U.S. dollar exchange rate amid easing fears of a global recession, while investors lowered expectations of aggressive U.S. interest rate hikes.

As for the Asia Pacific region, the increase in crude oil prices was also influenced by the gradual reopening of Shanghai, China's commercial center, after a two-month tight lockdown and strong petrochemical demands in China and India, as well as stronger regional mobility increases, especially in South Korea, Indonesia and India.

The following is the development of the average price of major crude oil in May 2022 compared to April 2022.

Dated Brent rose by 9.23 U.S. dollars per barrel from 104.39 dollars per barrel to 113.62 U.S. dollars per barrel.

WTI (Nymex) rose by 7.62 U.S. dollars per barrel from 101.64 U.S. dollars per barrel to 109.26 U.S. dollars per barrel.

Brent (ICE) rose by 6.04 U.S. dollars per barrel from 105.92 U.S. dollars per barrel to 111.96 U.S. dollars per barrel.

The OPEC basket rose by 8.23 U.S. dollars ​​per barrel from 105.64 U.S. dollars per barrel to 113.87 U.S. dollars per barrel.

Reporting by Indonesia Window