05 February 2015
The sharp decrease in the oil price has benefitted countries dependent on oil imports to sustain their economies such as Indonesia. However it could also undermine the country’s energy security.
The falling price of crude oil – from US$110 dollar per barrel to below US$50 dollar per barrel (based on the West Texas Intermediate and Brent Crude benchmark) – is benefitting oil-dependent economies around the globe. Oil hungry countries such as Japan, South Korea and China would be able to purchase oil at a lower price and could potentially cut their energy bills significantly.
On the contrary, oil producing countries such as Saudi Arabia, Venezuela, Iran and Russia would be negatively affected by the falling price of crude as it would slash revenue from oil and gas sectors, hence undermining government policies that are dependent on oil and gas revenues. As a net oil importer, Indonesia benefits tremendously from the dip in crude oil prices as it allows Jakarta to cut its energy import bills. Cheaper oil prices could possibly stimulate economic growth with increased consumption. From a political perspective, it could help the fledgling Jokowi administration gain greater approval from the public in the aftermath of the fuel price hike in November 2014.
…Keoni Indrabayu Marzuki is a Research Associate of the Indonesia Programme at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University.
IDSS / Online
Last updated on 01/12/2015