Indonesia s plan to raise fuel imports from US in shift from Singapore raises questions over costs

JAKARTA - A plan by the Indonesian government to import significantly more fuel from the US, while reducing purchases from Singapore, has raised concerns over the higher transport and insurance costs that would be incurred due to the longer sailing time through possibly treacherous waters.

The move is driven by ongoing negotiations with the US over the 32 per cent tariff the Trump administration has imposed on Indonesian goods, in response to Indonesia’s trade surplus with the US.

More than half of Indonesian fuel imports are currently from its neighbour Singapore, which refines crude oil from the Middle East, Australia and Malaysia.

The US, on the other hand, accounted for less than 0.1 per cent of Indonesia’s fuel imports in 2024.

Energy and Mineral Resources Minister Bahlil Lahadalia said on May 9 that the shift away from Singapore for some fuel imports would happen gradually.

Professor Iwa Garniwa, an energy analyst at the University of Indonesia, told The Straits Times: “The government must study such a plan carefully, taking into account the logistics factor.”

Importing fuel from the US would require some of the cargo to transit through the Suez Canal, said Professor Marsuki of the Hasanuddin University in South Sulawesi, who goes by one name.

The area has only recently recovered from security incidents such as missile attacks in the Red Sea by Yemen’s Houthi rebels.

“The risk arises from logistics costs due to the longer journeys and factors caused by the global geopolitics recently being less conducive to stable security. This gives a prospect of uncertainty, going forward,” Prof Marsuki told ST.

Ships plying the Red Sea route faced a doubling of their marine insurance premiums due to the rising level of insecurity off the coast of Yemen. War risk premiums rose to 0.7 per cent of the