Goldman Sachs Expects Brent Oil to Average $76 Per Barrel in 2025
Brent Crude oil prices are set to average $76 per barrel next year, down from an expected average of $80 a barrel in 2024, amid an expected surplus on the market, according to Goldman Sachs. “Our base case is that Brent stays in a $70-85 range, with high spare capacity limiting price upside, and the price elasticity of OPEC and shale supply limiting price downside. However, the risks of breaking out are growing,” the investment bank’s analysts wrote in a note carried by Reuters. Goldman Sachs expects 400,000 barrels per day (bpd) of surplus on the market in 2025. This surplus is expected to grow to 900,000 bpd in 2026. Therefore, the Wall Street bank sees Brent Crude prices averaging $71 per barrel in 2026. Goldman Sachs kept its 2025 average price forecast from last month when it said that it sees limited upside for oil prices next year amid sufficient supply and ample spare capacity. However, there is an upside risk to prices in the near term, if the U.S. enforces stricter sanctions on the Iranian oil industry and exports, according to Goldman Sachs. Brent Crude prices have the potential to spike to the mid-$80s early next year if Iran’s oil supply declines by about 1 million bpd in case of stricter sanction enforcement when Donald Trump becomes U.S. President, the bank’s analysts noted. Early on Friday, Brent Crude prices were up by 0.4% at $74.57, and the U.S. benchmark, WTI Crude, traded 0.36% higher at $70.40, amid renewed Ukraine-Russia tensions. Oil prices were on track to post a weekly gain after Russia shot a new kind of ballistic missile at Ukraine in the latest sign that the escalation there continues. The strike, featuring a hypersonic medium-range missile that has not been used before in warfare, came in response to a Ukrainian attack with U.S. and British ATACMS missiles on Russian territory.
Reliance Industries: Navigating Retail and Refining Challenges
Reliance Industries is tackling two significant challenges impacting its performance. The first challenge, a rebound in refining margins, signals a shift in market dynamics, while sluggish retail growth poses a more unpredictable hurdle, according to a JP Morgan report. Reliance’s stock has fallen 22% from its July peak as the NIFTY index dipped just 3.3%, erasing earlier gains. Despite this, its relative market valuations remain attractive amid generally high market pricing. The company, led by Mukesh Ambani, leverages its oil-to-chemical unit, telecom arm Jio, and retail sector, now constituting 50% of its 2023-24 EBITDA. A potential listing of Jio/retail could be delayed due to market conditions.
Guyana: No agreement with India to sell oil
The Guyana government says it has not entered into any agreement with India regarding the sale of crude oil to the Asian country, even as it left open the possibility of that being undertaken in the future. “We have not discussed any element of direct transaction for the sale of our crude to India,” Vice-President Bharrat Jagdeo told reporters as the Indian Prime Minister Shri Narendra Modi ended an official visit to Guyana. The communique issued following bilateral talks between the two countries “is very clear” and the two countries have expressed an interest in collaborating in several areas. “India has enormous expertise in many areas, but also clean energy, India is leading in solar in the world…on the fertiliser plant they are doing some studies for us to use the gas to build a fertiliser plant. “So in the whole hydrocarbon sector, there are lots of areas we can utilise Indian skills, Indian technology and also Indian investments. “We have not discussed any element of a direct sale to India at this stage because our crude for the next year, we have people who will market our crude. We just went through a public process for tender, and two companies won the right to market our crude for next year,” said Jagdeo. Jagdeo said in the communique “there’s lot to work on and in the future, I think, if it makes sense for both parties…we should work towards something like that. We don’t have a problem with that, but there is nothing that we have worked on that will result in any sale of crude in the next year or so because we already have people to market our crude,” Jagdeo said. He told reporters some of the Indian companies do buy from other places “that market our crude, so some of our crude have gone to India already”. Asked what would make it more likely for an agreement to be reached in the future, Jagdeo replied, “I do not want to speculate before there is a specific proposal on the table. But those concerns have been raised a long while a back, not now.
India’s Domestic Oil Production Dips While Refinery Output Surges in October 2024
India’s domestic crude oil and condensate production experienced a 4 per cent year-over-year decline in October 2024, reaching 2.3 million metric tonnes (MMT), according to recent data released by the Petroleum Planning and Analysis Cell (PPAC). Oil and Natural Gas Corporation (ONGC) remained the dominant producer, contributing 1.6 MMT, while PSC/RSC and Oil India Ltd. (OIL) added 0.5 MMT and 0.3 MMT, respectively. Despite the downturn in domestic production, Indian refineries demonstrated robust performance, processing 21.3 MMT of crude oil in October 2024, marking a 4.4 per cent increase from the previous year. Public sector and joint venture refineries handled 14 MMT, with private refiners processing the remaining 7.3 MMT. The vast majority of processed crude—19.2 MMT—came from imports, while domestic crude accounted for just 2.1 MMT. The petroleum product sector showed significant growth, with total output reaching 23 MMT in October 2024, representing a 5.3 per cent increase compared to the same period last year. Refineries contributed 22.7 MMT to this total, with fractionators adding 0.3 MMT. High-speed diesel dominated the product mix at 41 per cent, followed by motor spirit at 16.8 per cent, naphtha at 6.8 per cent, aviation turbine fuel at 6.6 per cent, and petcoke at 5.3 per cent. Import trends revealed mixed patterns, with crude oil imports rising by 4.2 per cent in October 2024 and showing a 3.5 per cent increase during the April-October period of FY 2024-25. While petroleum product imports declined by 2.2 per cent in October, they registered a 7.7 per cent growth during the seven-month period, driven primarily by increased imports of petcoke, LPG, and lubricants. Export performance remained particularly strong, with petroleum products showing a substantial 12.7 per cent increase in October 2024 and a 4.2 per cent rise during the April-October period. This growth was largely attributed to increased international sales of petcoke/CBFS, fuel oil, motor spirit, and aviation turbine fuel. The cumulative data for April-October FY 2024-25 indicates a 1.8 per cent growth in crude oil processing compared to the previous year. The PPAC findings suggest that while enhanced refinery throughput and export growth have helped counterbalance the decline in domestic crude production, India’s dependence on imported crude oil continues to grow as the nation works to meet its expanding energy requirements.