BRICS membership opens door for Indonesia to access Russia’s crude oil

Indonesia’s recent entry to the BRICS bloc could provide the nation with potential economic advantages, particularly in addressing trade deficit in the oil and gas sector, according to state news agency Antara.

Achmad Nur Hidayat, an economic and public policy expert at the Universitas Pembanguan Nasional Veteran Jakarta, held that Indonesia’s official BRICS membership could facilitate access to Russian crude oil at more favourable prices.

The primary advantage of oil trade with Russia lies in the potential for below-market pricing, he said, adding Western sanctions on Russian oil have prompted the country to offer substantial discounts to non-Western markets.

Besides, the cooperation, he stated, extends beyond mere oil procurement as the partnership could pave the way for broader energy collaboration, including investments in energy infrastructure, technological advancement, and knowledge transfer, supporting Indonesia's long-term energy diversification strategy.

However, the expert pointed out notable challenges in the cooperation. Given Western sanctions, a significant hurdle lies in Russia's limited access to global payment systems, particularly SWIFT (Society for Worldwide Interbank Financial Telecommunication). This restriction could complicate trade transactions between the two nations.

Against this backdrop, Indonesia should seek alternative payment mechanisms such as using local currencies or special payment systems. Yet, this approach could potentially strain diplomatic relations with Western nations, who remain Indonesia's strategic partners.

Archmad said that to reduce risks, the Indonesian government should work to ensure prudent and transparent energy cooperation with Russia, laying stress on the significance of clear policy frameworks to manage risks effectively.

The cooperation must serve the nation’s interests and public welfare, he added.