Indonesian President Joko Widodo under pressure to import Russian oil

Indonesian President Joko Widodo said his country needs to consider “all options” as it considers joining other Asian economies including India and China in buying Russian oil to offset rising energy costs.

Indonesia It has not imported significant amounts of oil from Russia in years, but the Widodo government is under mounting pressure to curb rising costs after it was forced to raise some fuel prices by as much as 30 percent this month.

Any move to buy Russian oil at a price higher than A The maximum limit set by the G7 countries Indonesia could be left vulnerable to US sanctions as it prepares to host the G20 summit in Bali in November. Widodo invited world leaders, including Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky, to the meeting.

“We are always watching all options. If there is a country [and] In an interview with the Financial Times, Widodo said in response to a question about whether Indonesia would buy Russian oil.

“There is a duty [the] The government to find different sources to meet the energy needs of its people. “We want to find a solution,” added Widodo, better known as “Jokowi,” speaking at the presidential palace in Jakarta.

Widodo’s comments emphasized the difficulty many countries face while trying to navigate the geopolitics and energy crisis Hit homes and businesses all over the world.

Indonesia, Southeast Asia’s largest economy, has long pursued a policy of nonalignment with the great powers, with Widodo visiting Moscow and Kiev in June, just months after Russia’s invasion of Ukraine in February, to personally invite their leaders to the G20 summit.

“The PR would actually be bad if the government did that [bought Russian oil] “Because Indonesia is a non-aligned country, it is even a founder of the Non-Aligned Movement,” said David Somwal, chief economist at the Bank of Central Asia in Jakarta.

Moscow has offered to sell oil to Indonesia at a price 30 percent lower than the international market price, according to the country’s tourism minister. Pertamina, Indonesia’s state-owned oil company, said in August it was studying the risks of buying Russian oil.

But the United States last week Threatened to impose sanctions On Russian oil buyers who did not comply with the planned price cap and who used Western services in transactions, which increases the potential risks for countries doing business with Moscow.

Indonesia’s decision to cut energy subsidies this month was prompted by a threefold increase in the cost of fuel subsidies from the original budget, to 502.4 trillion rupiah ($34 billion).

The Indonesian economy has escaped the energy crisis thanks to strong domestic consumption and high prices for two of its biggest exports, coal and palm oil, with GDP growth of 5.44 percent in the second quarter of the previous year.

However, higher fuel prices are expected to push inflation higher and force the central bank, Bank Indonesia, to raise interest rates, which could hurt economic growth.

“Energy is closely linked to the best interests of the people,” Widodo said.

If Indonesia joins India and China in buying Russian oil, it will help Moscow make up for much of its lost income from reduced shipments to Europe.

that FT analysis of Chinese and Indian customs statistics It showed that countries imported an additional 11 million tons of oil from Russia in the second quarter of 2022, compared to the first quarter.

Indonesia and Russia also have several large energy projects planned, including a $16 billion refinery in East Java being built by Pertamina and Russia’s Rosneft. Russia’s state-owned Zarubezhneft owns half a stake in the tuna oil and gas exploration area in the South China Sea, an area close to Indonesia’s maritime border with Vietnam.

regarding G20 summit in BaliBesides Putin and Zelensky, world leaders are expected to attend the event Chinese President Xi Jinping and US President Joe Biden, Widodo said, adding that there is an opportunity for the Ukrainian president to make his speech virtually.

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