An energy expert has warned that the Indonesian government’s plan to redirect its crude oil and fuel imports from Singapore to the United States would solve one problem, but create several new ones.

The proposed shift was revealed by Minister of Energy and Mineral Resources Bahlil Lahadalia as part of a broader trade negotiation strategy to help reduce the U.S. trade deficit and lower the U.S. import tariff on Indonesian goods.

“While importing oil from the U.S. may help reduce the American trade deficit, it could introduce technical and economic problems for Indonesia,” Fahmy Radhi, an energy economist with the Gadjah Mada University, said in a statement on Wednesday, May 14, 2025.

“U.S. crude may not be compatible with Pertamina’s refineries, and the U.S. doesn’t sell Pertalite fuel, which requires specific blending,” Fahmy, who is also a former member of Indonesia’s Oil and Gas Mafia Eradication Task Force, added.

He raised concerns about cost efficiency, noting that oil imported from the U.S. is likely to be more expensive due to higher logistics costs compared to Singapore.

Furthermore, he cautioned that entrenched interests could resist the change. “The oil and gas mafia, which has long benefited from fuel import rent-seeking via Singapore, will likely try to obstruct this policy shift,” he cited.

Fahmy urged the government to ensure the technical compatibility of U.S. crude with Pertamina’s systems and to negotiate prices that match or undercut Singaporean oil prices. He emphasized that unless these conditions are met and the oil mafia is tackled head-on, the policy may backfire.

“A good policy must solve problems without creating new ones,” he said.

Import shift

Previously Bahlil revealed that 54 percent to 59 percent of the country's imported fuel has been sourced from its neighboring country, Singapore. However, with price parity between Singapore and alternative suppliers in the Middle East, he said, Indonesia is now reevaluating its sourcing policy.

“When I checked, the price was the same compared to the Middle East. So we started thinking − not just thinking, it's almost certain − we will source oil from other countries,” Bahlil said.

He emphasized that the shift is driven not only by logistical and pricing factors but also by broader geopolitical and geo-economic strategies.

“This is not just about price. There are geopolitical and geo-economic issues at play. We need to create a balance with other partners,” he said.

The minister also confirmed that Indonesia has existing agreements with the United States that include commitments to purchase certain products, including fuel and liquefied petroleum gas (LPG).

“We have agreements with the U.S., and among the items we are expected to buy from them are fuel and LPG,” he cited.

To support this strategic shift, Indonesia is developing larger port infrastructure to accommodate bigger fuel tankers, which will improve shipping efficiency and reduce dependency on smaller vessels typically used for imports from Singapore.

The transition is already underway, with Bahlil estimating that 50 percent to 60 percent of fuel imports may soon be sourced outside Singapore. "Eventually, it could be reduced to zero," he said.

This policy move reflects Indonesia’s intent to diversify its energy sources and strengthen economic ties with major global partners, particularly in a time of shifted geopolitical alignments.