A very bold geopolitical move from Jakarta! Indonesia has reportedly received its first shipment of crude oil from Russia. This is a direct impact of the large-scale trade agreement signed between the two countries last April.
This influx of Russian oil is clear evidence of how Moscow is cleverly taking advantage of the US-Iran war conflict that is paralyzing the Middle East to expand its oil customer empire in Southeast Asia.
$75 Million Transaction: Using Unique Purchasing Tactics
Based on customs data compiled by Big Trade Data, here are the details of the maiden shipment:
Supply Amount: A total of 770,000 barrels of crude oil safely landed at the Port of Balikpapan, Indonesia on June 29.
Trade Value: Estimated to be worth around $75 million (RM330+ million).
Logistics: The oil was loaded from the Port of Kozmino, Russia, and transported using a tanker named Sierra.
Interestingly, this Russian cargo was not purchased by Indonesia’s national oil company, PT Pertamina (as usual). Instead, it was purchased by a government entity known as Lemigas, a body whose main function is actually to test fuel!
Customs data also revealed that the exporter for this shipment was a mysterious Singapore-based company, Silkroute Shipping & Chartering Pte, which was found to have no official website.
To Save the Rupiah & Prevent the People from ‘Raging’
As one of the largest oil importers in the region, Indonesia has faced severe economic pressure since the US-Iran war paralyzed traffic in the Strait of Hormuz.
The knock-on effects of the conflict have resulted in:
Rupiah Falls: The soaring cost of oil imports has dragged the Rupiah (IDR) currency to its lowest level in history against the US Dollar last month.
People’s Protests: The increase in domestic petrol and diesel prices in Indonesia has sparked a wave of demonstrations and mass protests by people against the government in the streets.
Out of desperation, Indonesian President Prabowo Subianto flew to Moscow earlier and locked in a long-term supply agreement with Russia involving up to 150 million barrels of oil!
Russia is the Most 'Profitable' Behind Western Sanctions
Indonesia's purchase of Russian oil will certainly invite sharp glances from the Western bloc. Since the invasion of Ukraine in early 2022, Europe and the US have imposed strict sanctions on Russian oil to restrict Moscow's war revenue.
However, the Western strategy seems to be 'eating its master'. The latest war crisis in Iran has pushed global crude oil prices to high levels, becoming a golden bottom for Russia to sell their oil at a hefty discount to desperate Asian countries like Indonesia.
This Indonesian move is a very logical economic survival strategy. Instead of continuing to suffer the loss of buying expensive oil in the Middle East which is at risk of being bombed, it is better for Jakarta to wholesale cheap oil from Russia to save the value of the Rupiah currency and calm the anger of the people.
We expect the trend of this energy trading bloc transition to be even more vigorous. As long as the Strait of Hormuz is not secure, Russia will continue to dominate the oil market to Asia, thus reducing the effectiveness of economic sanctions imposed by the US and its allies.
Do you think Indonesia's bold move to buy Russian oil will make the US 'angry' and impose economic sanctions on Jakarta? Try commenting below!
