In May 2025, Indonesia sent shockwaves through Asia’s energy market. For decades, the country had relied on Singapore—a city-state with no oil of its own—as its primary supplier of refined petroleum. But that’s about to change.
Indonesia’s Energy and Mineral Resources Minister Bahlil Lahadalia publicly announced plans to cut up to 60% of its fuel imports from Singapore within just six months. The move won’t happen overnight—existing contracts must run their course—but the message was unambiguous: Indonesia is actively searching for new suppliers and aiming to drastically reduce, and perhaps one day eliminate, fuel imports from Singapore altogether.
So, what prompted this sudden break from tradition?
The Core Grievance: Proximity Without Perks
Minister Bahlil’s frustration centered on price fairness. Singapore may be geographically close, but that hasn’t translated into cheaper prices for Indonesia. The minister pointed out that Singapore charges Indonesia the same international market rates as Middle Eastern suppliers—despite being just across the Strait of Malacca. “I say this is a shameful strategy,” Bahlil remarked, highlighting the irony that Singapore sells fuel but produces no crude oil.
As of early 2025, over half of Indonesia’s refined fuel—including gasoline, diesel, and jet fuel—came from Singapore. This longstanding relationship was built on convenience, efficiency, and infrastructure. Singapore, with a refining capacity of about 1.3–1.5 million barrels per day, became a regional energy hub by importing crude oil, refining it, and exporting the finished products. For Indonesia, this meant a reliable, nearby source with short delivery times.
But despite the convenience, Indonesian officials felt taken for granted—offering loyalty without receiving discounts or preferential terms.
A Strategic Play: Fuel Diplomacy With the United States
There’s more at play than just pricing.
Indonesia’s pivot away from Singapore also aligns with its negotiations with the United States. The U.S., under President Donald Trump, threatened to slap 32% tariffs on Indonesian goods, citing trade imbalances. However, the implementation was paused until July 2025, offering time for negotiations.
One of Jakarta’s key proposals to Washington: increase imports of U.S. energy products by $10 billion.
That includes:
- Crude oil
- Refined fuels (like gasoline and diesel)
- Liquefied petroleum gas (LPG)
Currently, the U.S. supplies just 4% of Indonesia’s crude oil imports, and its share in refined fuels is almost negligible. Minister Bahlil confirmed that boosting U.S. energy imports is a deliberate diplomatic move—a strategy to rebalance trade and avoid the painful tariffs.
Rewiring the Fuel Network
Executing this plan is no small feat.
Pertamina, Indonesia’s state-owned energy giant, has been directed to halt fuel imports from Singapore and shift procurement elsewhere. This involves major logistical changes, including:
- New import contracts with U.S. and Middle Eastern suppliers
- Bigger ships for longer voyages
- Expanded port facilities to handle Very Large Crude Carriers (VLCCs)
Indonesia is reportedly already building new docks to accommodate this shift.
Despite the bold direction, officials admit the change must be gradual. Pertamina’s current contracts—often signed on a FOB Singapore basis—can’t be torn up overnight. Traders say as of mid-May 2025, it’s still “business as usual.” But when the next round of contracts is negotiated for the second half of 2025, expect a major shift.
Why Singapore Became Indonesia’s Main Fuel Source in the First Place
To understand the scale of this disruption, it’s worth looking back.
Indonesia turned to Singapore over the decades because:
- Singapore had refinery capacity; Indonesia didn’t.
- It was close.
- It offered consistent, quality supply.
While Indonesia struggled to build new refineries and modernize old ones, demand for fuel exploded as the country industrialized and urbanized. The practical answer? Buy from the well-oiled machine next door.
Singapore became a regional oil refining and trading powerhouse, importing crude from the Middle East and elsewhere, and then refining and distributing it across Asia. By the 2010s and 2020s, Singapore supplied over 60% of Indonesia’s gasoline imports, and large shares of diesel and jet fuel as well.
Here’s a snapshot of Indonesia’s 2024 fuel import sources:
- Gasoline from Singapore: 236,000 barrels per day (bpd)
- Gasoline from Malaysia: 79,500 bpd
- Diesel from Singapore (early 2025): 54,000 bpd
- Jet fuel from Singapore (early 2025): 8,300 bpd
Singapore’s dominance wasn’t just about supply—it was about scale, efficiency, and existing trade relationships.
The Future: Will It Work?
Indonesia’s shift could reshape regional energy trade.
However, challenges remain:
- Longer shipping distances will add to logistics costs.
- Reliability of new suppliers (like U.S. refiners) must be tested.
- Storage and distribution upgrades within Indonesia are needed.
Moreover, it’s not guaranteed that U.S. energy companies can offer significantly lower prices or better terms than Singapore. The move is as much about geopolitics as it is about economics.
Still, the desire for greater bargaining power, supply diversity, and diplomatic leverage appears to outweigh the risks in Jakarta’s eyes.
Final Thoughts
Indonesia’s plan to cut fuel imports from Singapore isn’t just about dollars and cents. It’s about strategic realignment—a reshaping of alliances in energy trade and a bid to strengthen ties with the U.S. while asserting independence from a long-dominant supplier.
Whether the gamble pays off remains to be seen. But one thing is clear: Southeast Asia’s energy landscape is about to change.