Indonesia has enjoyed an unprecedented windfall from the current crunch in the global energy supply, as reflected in its trade surplus in July, August, and September of respectively US$4.12 billion, $4.75 billion, and $4.37 billion. As a result, the country’s cumulative trade surplus increased from $11.83 billion in the January-June period to $25.07 billion in January-September. Taking this development into consideration, Bank Indonesia has revised up its 2021 projection for the current account-to-gross domestic product (CA-to-GDP) ratio from a deficit to zero percent.¹ 

The global energy crunch is due to the combination of a periodical crunch in energy-producing countries and a sudden demand surge. It was initially caused by the spread of the Delta variant of COVID-19, particularly in the Asia-Pacific, which forced many energy-producing countries to significantly reduce the scale of their mining operations. For example, Australia imposed in August a one-week lockdown in key coal-producing regions such as Newcastle and Hunter.²  The energy-producing countries were unable to scale up their operations quickly when many countries emerged from their Delta-induced lockdowns, resulting in the ongoing global energy shortage.

As a result, the monthly coal price more than doubled from $92.2 per metric ton (MT) in April to $185.7 per MT in September. In October, daily coal price reaches a historic high $269.5 per MT. Similarly, the monthly natural gas price almost doubled from $8.3 per million British thermal units (MMBTU) in April to $13.9 per MMBTU in September. The monthly Brent crude oil price increased modestly from $64.8 per barrel in April to $74.6 per barrel in September. The global hike in energy prices has prompted governments and businesses across the world to ramp up their renewable energy investments. In Indonesia, this had led to a hike in the crude palm oil price to over $1,000 per MT.

China, one of the severely affected economies, has taken various policy measures to reduce the strain from the global energy crunch. For instance, Beijing has eased its import restrictions on Australia³ , as well as increased the amount of coal it imports from northern neighbors Mongolia and Russia.⁴  Domestically, the Chinese government has ordered banks to increase funding for coal miners and other energy companies.⁵ 

It will take time for the world’s energy producers to scale up production to meet the sudden surge in energy demand. The global energy crunch may persist until next spring, and Indonesia is in a position to reap the financial benefits.