Indonesia to buy Russian oil after fuel prices skyrocket

The Indonesian president is considering following India’s and China’s lead and buying oil from Russia to alleviate increasing pressure from rising energy costs.

In early September, the president decided to raise the price of government-subsidized fuel by 30%, saying that raising fuel prices was his last resort because they could no longer withstand the fiscal pressure, leading to discontent that erupted in protest marches across the country.

Indonesia, however, faces U.S. sanctions if it buys Russian crude at prices above the cap set by the G7 countries, although no formal cap has yet been set.

In August, Indonesia’s tourism minister said Indonesia had received an offer to buy crude oil from Russia at a 30% discount. Later, the Indonesian state oil company Pertamina said it was considering the risks of buying Russian oil.

Indonesia, Southeast Asia’s largest economy, reported annual inflation of 4.69% in August, well above the central bank’s 2-4% target for the third month in a row, due to rising food prices.

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