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View all search resultsProduction cuts, cost pressures cloud war-driven commodity windfall
On March 12, Finance Minister Purbaya Yudhi Sadewa said the state budget could reap windfall revenue from rising coal and CPO prices.
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Workers load oil palm fruit bunches onto trucks on PT Wanasawit Subur Lestari's plantation in Pangkalan Bun, Central Kalimantan, on Dec. 19, 2015. (JP/Dhoni Setiawan)
A
side from adding strain to the country’s swelling energy subsidy bill, the government has said the US-Israeli war on Iran, which has forced the closure of the Strait of Hormuz and triggered a significant rise in oil prices, has also lifted demand for Indonesia’s key exports of coal and crude palm oil (CPO).
Industry players, however, caution that the so-called windfall is being eroded by rising logistics costs and the government’s own policy of trimming production quotas this year.
On March 12, Finance Minister Purbaya Yudhi Sadewa said the state budget could reap windfall revenue from rising coal and CPO prices.
“The government continues to closely monitor these geopolitical developments, ensuring that state budget instruments work responsively while maintaining prudent fiscal policy,” Purbaya said, adding that policy responses would remain measured “to preserve economic stability and public purchasing power.”
As oil prices remain elevated at around US$100 per barrel due to supply concerns amid the Iran war, many countries have turned to alternative energy sources such as coal and biofuels, which can be produced by blending diesel with fatty acid methyl ester (FAME) derived from CPO.
The increased demand has driven up prices, with Newcastle coal futures rising to $135 per tonne, about 16 percent higher than before the war, while CPO CIF Rotterdam climbed by more than 10 percent to around $1,500 per tonne over the same period.
The Philippines, which declared a national energy emergency on Tuesday, said it was keeping open the option of increasing coal purchases from Indonesia, claiming that Jakarta would place no limits on coal orders from Manila.
