India’s ethanol blending push faces US trade pressure
India’s ethanol blending programme—once held up as a model of clean energy transition—is now facing a complex web of domestic bottlenecks and international pressure. After achieving the 20% blending target ahead of the March 2025 deadline, policymakers were expected to raise the bar to 30% by 2030. But those ambitions are now under threat, not just from production constraints, but from Washington’s insistence that India open its market to US ethanol imports as part of an ongoing bilateral trade agreement. The Indian government finds itself caught in a policy dilemma. Yield to American demands, and the goal of self-reliance in sustainable fuels is jeopardised. Resist, and it risks derailing the broader trade deal, including the long-anticipated bilateral trade agreement (BTA). Ethanol as a strategic lever Ethanol blending has become a key pillar of India’s energy security strategy. By mixing ethanol—produced from sugarcane, maize, and other agricultural feedstocks—with petrol, India has managed to reduce crude oil imports and cut its fuel bill. Over the past decade, this shift has saved the country over Rs 1.2 trillion in foreign exchange and substituted nearly 19.3 million metric tonnes of oil. But ethanol is not just about energy economics. It also plays into rural prosperity, generating demand for agricultural produce, creating jobs in the hinterland, and aligning with India’s Paris Agreement climate goals. Like Brazil, which successfully scaled ethanol blending to 30% and beyond, India is eyeing higher ratios like E27 and even E100. American shadow on ethanol ambitions The US push to export cheaper, corn-based ethanol to India has alarmed domestic producers. Indian farmers—particularly in Maharashtra, Uttar Pradesh, and Karnataka—have invested heavily in cultivating sugarcane and maize to supply distilleries. Opening the market to imports risks undercutting local prices, undermining both farmer incomes and ethanol viability. Senior government officials have questioned the logic of compromising fuel sovereignty to appease an external partner. The concern is not only economic but strategic: energy self-sufficiency is critical for national resilience. Capacity constraints and economic viability Even without US imports, India’s ethanol supply chain is under stress. The current production capacity of 17 billion litres is expected to be maxed out by 2026 due to rising industrial and potable alcohol demand. To sustain E20 blending and aim for E30 by 2030–31, the Indian Sugar Manufacturers Association (ISMA) estimates that an additional 4.75 billion litres will be needed—along with Rs 220 billion in fresh investments. But investor appetite is waning. Shrinking margins—from 12–13% a few years ago to just 1–2% today—are discouraging expansion. Rising feedstock prices and stagnant ethanol procurement rates since 2022–23 have squeezed profitability. Triveni Engineering & Industries, a major player in sugar and ethanol, recently scrapped its proposed distillery in Nangal due to poor returns. Others are equally cautious.
GAIL Ranchi commenced offtake of Coal Bed Methane in Jharkhand
Indian state-owned energy corporation, GAIL’s City Gas Distribution Ranchi, has commenced the offtake of Coal Bed Methane (CBM) from the North Karanpura CBM Block in Jharkhand, marking a major milestone in harnessing indigenous energy resources. This development reinforces our commitment to enhancing local energy security while supporting the Government of India’s vision of promoting clean, sustainable, and alternative fuel sources. The inaugural LCV, transporting approximately 2000 SCM of CBM, was ceremonially flagged off by Mr. Prashant K Singh, DGM (CGD), Mr. Vikas Anand, CM (CGD),Mr. Saurav Anand, SM (F&S), along with officials from ONGCL, PEL, and IOCL. This initiative not only expands access to cleaner fuels but also contributes to emission reduction and fosters economic growth in the region.
BofA: The Saudis Are Readying for a Long Oil Price War
Saudi Arabia is getting ready to engage in a protracted oil price war with its rivals, Bank of America’s leading commodities expert told Bloomberg on Monday. According to Francisco Blanch, BofA’s head of commodities research, the unfolding oil price war is going to be “long and shallow”, rather than “short and steep” as the Kingdom tries to claw back lost market share, especially from U.S. shale producers. Last month, OPEC+ announced a third output increase of 411,000 b/d for the month of July, a similar clip to the previous two months. Commodity experts began warning last year that Saudi Arabia was willing to ditch its traditional role as OPEC’s swing producer by abandoning its unofficial price target of $100 a barrel in favor of increased output. Saudi Arabia accounted for 2 mb/d of the group’s 3.15 mb/d in output cuts before it started unwinding in April. Traders are now bracing for hard times, with oil futures traders betting that the ongoing unwinding of production cuts by OPEC+ will eventually lead to a supply glut and even lower oil prices. According to the latest Commitment Of Traders (COT) report by CME Group, open interest in calendar spread options hit record levels in the current week, with speculators holding the biggest net position bets on weaker U.S. crude futures curve since 2020. Oil futures charts are flashing an unusual “hockey-stick” shape of the curve, with oil markets pricing tight supply through 2025, followed by an oversupply in 2026, according to the report. The spread between the WTI July contract and the August contract narrowed 3 cents on June 5 to $0.93 a barrel, while the spread between the December 2025 contract and the December 2026 contract widened by 10 cents to $0.53. “There is a lot of risk in the trade,” Nicky Ferguson, head of analytics at Energy Aspects Ltd, told Yahoo Finance, adding that rising activity is being driven by “strong prompt, weak deferred balances, and a very changeable geopolitical environment that makes holding futures difficult.” This is hardly the first time that Saudi Arabia is engaging in a race to the bottom with its rivals. The kingdom has undertaken a similar strategy at least twice over the past decade, with varying degrees of success. U.S. shale producers successfully weathered the 2015 oil price war by rapidly reorganizing into a meaner and leaner production machine that could breakeven at WTI price of as low as $35 per barrel, down from $70 per barrel just a few years earlier. Five years later, the U.S. Shale Patch required the direct intervention of then U.S. President Donald Trump, whose threats of withdrawing military support for Saudi Arabia persuaded de facto Saudi ruler Crown Prince Mohammed bin Salman to toe the line and abandon the oil price war. Unfortunately, U.S. shale producers are more vulnerable this time around: a March Dallas Fed Energy Survey found that the U.S. Shale Patch requires WTI prices of $65 per barrel or more to drill profitably. U.S. rig counts have declined 4% Y/Y and are now 7% below the 5-year average as producers scale back drilling activity amid rising costs. Tariffs on U.S. steel imports are partly to blame here, increasing the price of fracking equipment. Meanwhile, geological constraints are also posing a significant obstacle to efforts to ramp up production as the nearly two-decades-old U.S. shale boom plateaus. The EIA has predicted a small increase in U.S. crude output to 14 million barrels per day in 2027, up from 13.2 million barrels in 2024. That said, Saudi Arabia and OPEC+ do not have carte blanche to continue flooding the markets with oil: the Kingdom needs Brent price of at least $96.20 per barrel to balance its books in fiscal year 2025, approximately $30 per barrel higher than current Brent price. Further, the country drew down considerably on its foreign exchange reserves in past oil price wars, limiting its ability to sustain another long war now. However, Saudi Arabia is likely to gain more leverage in future showdowns as it continues to diversify its economy. The country is accelerating its $2.5 trillion mining plans, while also investing in technologies to optimize oil production and lower carbon emissions. Saudi Arabia’s mineral reserve potential has grown dramatically over the past decade, from $1.3 trillion forecasted eight years ago to $2.5 trillion currently. The Kingdom has set a goal to rapidly grow the mining sector, with its contribution to the economy expected to jump from $17 billion to $75 billion by 2035.
Oil Prices Slip Despite U.S.-China Talks
Crude oil prices moved lower earlier today even after the latest round of talks between the United States and China on trade yielded positive results, as traders adopted a wary stance on the news. At the time of writing, Brent crude was trading at $66.82 per barrel and West Texas Intermediate was changing hands for $65 per barrel, after U.S. and Chinese government officials said they had agreed on easing export restrictions and devising a framework for the resolution of their trade conflict. “We have reached a framework to implement the Geneva consensus and the call between the two presidents,” U.S. Commerce Secretary Howard Lutnick said, as quoted by Reuters. “The idea is we’re going to go back and speak to President Trump and make sure he approves it. They’re going to go back and speak to President Xi and make sure he approves it, and if that is approved, we will then implement the framework.” It was perhaps the fact that the two presidents had yet to sign off on the framework that kept oil traders wary, even though oil prices are trending higher than last week. “In terms of what it means for crude oil, I think it removes some downside risks, particularly to the Chinese economy and steadies the ship for the U.S. economy – both of which should be supportive for crude oil demand and the price,” IG analyst Tony Sycamore told Reuters. Meanwhile, the European Union said it was discussing a ban on the currently non-operating Nord Stream pipeline and a lower price cap on Russian crude as part of its next package of sanctions against Moscow—the 18th in a row. In potentially bearish news for oil, the World Bank lowered its global growth forecast for the year to 2.3% from 2.7%, saying the global economy is set for its weakest year since 2008.