Govt Considering Revising Oil Prices In Draft 2016 State Budget

Jakarta (Antara Bali) - The government is considering revising the assumed Indonesian crude price (ICP) of US$60 per barrel in the draft 2016 state budget following the current decline in global oil prices.

The government has been monitoring the downward trend in global oil prices on a daily basis, Energy and Mineral Resources Minister Sudirman Said revealed at a meeting with the Commission VII of the House of Representatives (DPR) on Wednesday.

"We will keep monitoring the developments until we arrive at a decision to set (the most realistic) ICP assumption," he said.

If global oil prices continue to fall, the assumed ICP of US$60 per barrel might be revised, he said.

At the meeting, the House Commission VII urged the government to study comprehensively the ICP assumption in the draft 2016 state budget.

The Chief of the House Commission VII Kardaya Warnika said current oil prices were far below the assumed ICP of US$60 per barrel.

"We ask the government to convey a comprehensive study of oil prices during the next few days," he said.

Given the current oil prices, the assumed ICP in the 2016 state budget must not exceed US$50 per barrel, member of the House Commission VII Kurtubi said.

"The assumed ICP of US$60 per barrel is no longer realistic. I propose a maximum ICP of US$50 per barrel," he said.

According to him, as long as the Organization of Petroleum Exporting Countries (OPEC) did not reduce production, oil prices would continue to fall.

He said global oil prices were related not only to fundamental conditions, such as supply and demand, but geopolitics as well.

"OPEC will reduce production if the oil prices are lower than the production cost in the main fields," he said.

Global oil prices have continued to fall. On August 26, the price of WTI plunged to US$39 per barrel, and the price of Brent crude declined to US$43 per barrel. (WDY)