Several international institutions agree to set oil price to be below US$ 50 per barrel.

KATADATA - 2016 is predicted to be a grim year for oil and gas business players. Several international institutions have projected the price of the black gold will continues to fall. The International Monetary Fund (IMF) agency has predicted that the oil price this year will touch US$ 20 per barrel, while the World Bank and the Economist Intelligence Unit (EIU) have set the price to be US$ 49.5 and US$ 48, respectively. 

The oil price has started to plunge since mid-2014, when OPEC has decided not to reduce their daily production quota. And so, from US$ 109, the oil price plunged to US$ 50 per barrel for the whole 2015. Such a shame, since it is hoped that if OPEC agrees to reduce the production, the price plunge due to the oversupply of shale gas and other nonconventional oil can be suppressed.

Amid the decline in the global demand since 2014, the supply increases. The restriction removal of Iran’s oil export activity, not to mention the economic sanction removal, by the United States has made Iran’s supply of oil to increase and flood the market. The oil price in this January has even touched US$ 37, the lowest ever recorded for the past 11 years. 

Several oil-exporting countries now chose to be realistic in setting up their budgets. Saudi Arabia and Nigeria, for example, have set their prices to be at US$ 29 and US$ 38 per barrel, respectively. These benchmark prices are way below the price set in the Indonesian state budget, which is at US$ 50 per barrel.

Note: This Econographic is the revision from the previous results. The numbers of oil price assumption in the State Budget 2016 have been revised.

Leafy Anjangi