Indef: Syrian Conflict can Affect ICP and Domestic Fuel Prices
15 April 2018 15:52 WIB
TEMPO.CO, Jakarta - The Institute for Development of Economics and Finance (Indef) Economist Bhima Yudistira Adhinegara, said that the Syrian conflict could affect the Indonesian Crude Price (ICP). Bhima further predicts that the ICP might soon rise to above USD 80 per barrel.
"USD 80 per barrel for Brent, which is currently at USD 72.5 per barrel. Brent is ICP's benchmark that has an immediate effect," said Bhima in a telephone interview with Tempo on Sunday, April 15, 2018.
Bhima asserted that past conflicts in the Middle East had proven to have an effect on the prices of crude oil. For example, the United States military invasion of Iraq in 2003 had sparked the rise of crude oil prices up to 19 percent on average.
Another example is the Libyan conflict and the Arab Spring in 2011 that caused crude oil prices to rise to USD 103 per barrel.
Furthermore, Bhima said that the increasing ICP will affect subsidies towards fuels and electricity. It has been made worse by the fact that the government had initially assumed that the ICP will only reach USD 48 per barrel.
This means that the government must add its fuel subsidies and the budget deficit can potentially exceed its 2.19 percent target.
LANI DIANA WIJAYA
