Indonesia shifts fuel imports from Singapore to US amid tariff negotiations

[WORLD] Indonesia is preparing to reroute a portion of its fuel imports from Singapore to the United States as part of broader negotiations aimed at addressing steep US-imposed tariffs, Energy Minister Bahlil Lahadalia announced on May 9.

The United States has levied a 32 per cent tariff on Indonesian exports, though enforcement has been delayed until July to allow for bilateral talks. The tariffs are rooted in ongoing trade disputes, particularly Washington’s concerns over Jakarta’s nickel export policies, which the US says are distorting global markets.

In an effort to rebalance trade relations and secure more favorable terms, Indonesia is looking to adjust its fuel sourcing strategy. Analysts suggest the move also reflects Jakarta’s intent to diversify its energy partnerships amid shifting global supply chains.

Minister Lahadalia stated that the transition away from Singapore would be phased in over time, with as much as 60 per cent of fuel imports potentially redirected to the US in the early stages.

Singapore has traditionally served as a central hub for refined fuel in the region. However, rising costs and evolving geopolitical dynamics are pushing Indonesia to explore alternative suppliers. With increased oil output and competitive pricing, the US has emerged as an attractive option. Nonetheless, industry observers warn that logistical hurdles—such as extended shipping distances and elevated transport costs—may limit the economic advantages.

“It is almost certain that we will take fuel from other countries, not from Singapore,” Lahadalia told reporters, adding that the shift could be implemented within six months.

The move is part of a broader proposal presented by Indonesia to the US as a potential pathway to ease the tariff dispute. It complements ongoing efforts by Jakarta to deepen economic ties with Washington, including talks on critical minerals and renewable energy cooperation.

Indonesia has expressed intentions to raise its US energy imports to approximately US$10 billion (S$13 billion), which would include refined fuel, crude oil, and liquefied petroleum gas. As part of the plan, Indonesia is aiming to increase crude oil imports from the US tenfold. Currently, only around 4 per cent of Indonesia’s crude imports originate from the US.

Such a shift could reshape regional trade dynamics, particularly for Singapore, which has long been Indonesia’s main supplier of refined fuels. While Singapore’s refining capabilities remain strong, a significant drop in demand from its largest neighbor could prompt strategic adjustments in its export model. Meanwhile, US energy exporters stand to strengthen their presence in the fast-growing Southeast Asian market.

State energy company Pertamina has indicated it is prepared to implement the new import plan, and may expand its fuel storage capacity to accommodate increased volumes from the US.