The Market Is Well Supplied – So Why Is Saudi Arabia Raising Oil Prices?
OPEC+ served two surprises to the oil trading world in a matter of weeks. First, it said it would bring back three times the amount of oil supply it planned to originally in May. Then, it said it would repeat the exercise in June. And then it emerged that Saudi Arabia is raising selling prices for Asia when it would have made more sense to cut them, on the face of it. OPEC+ is in the spotlight and it’s probably enjoying it as prices slide further down and U.S. shale drillers curb activity. OPEC+ said in April it would add 411,000 bpd to its collective output in May, throwing the oil market in disarray after curbing supply for months in a bid to prop up oil prices. The move was such a reversal of tactics that it was quite understandable that it took everyone by surprise. Prices fell. Speculation abounded, with analysts suggesting anything from Saudi Arabia doing Trump’s bidding to being so desperate they’d opted for flooding the market in the tried and tested method of dealing with competition in a rather final way. Officially, OPEC+ members that have been cutting their output said that the market fundamentals were healthy enough to absorb not one but two monthly boosts of 411,000 bpd each. Unofficially, the story is that the Saudis got fed up with the Iraqis and the Kazakhs who have been overproducing pretty much since the production cuts began. Kazakhstan really annoyed Riyadh, per that story, by not just overproducing but reaching record-high output levels earlier this year. Some cited data about Asian crude oil imports as evidence that OPEC+ is trying to pump up a narrative that does not reflect reality. The argument is that imports into the biggest demand region are weakening and global inventories are only slightly below the five-year average. So, we have a pretty well-supplied market, and OPEC+ is shooting itself in the leg with the output additions. Of course, there is also the oil demand outlook. The oil demand outlook is grim if one follows the International Energy Agency. But Saudi Arabia, OPEC’s leader, does not follow the International Energy Agency. In fact, Saudi Arabia has a serious issue with the IEA and its forecasts, which the Saudis have slammed as blatantly biased in favor of the energy transition. Right now, the demand outlook is widely believed to be grim because of Trump’s tariff offensive against the world of trade. This outlook was a big reason why traders started the selloff in oil that brought prices down and then extended it as OPEC+ surprised said market with its two consecutive decisions to add more to that well-supplied market than initially planned. And then the news came that Saudi Arabia is raising its official selling price for crude for Asian buyers. In other news, OPEC’s total for April was down by 200,000 bpd, and not just because of the sudden slump in Venezuelan production after Chevron was kicked out by Trump. The UAE and Saudi Arabia also cut —and the UAE was given the green light to actually raise production. While traders and analysts try to wrap their heads around the logic guiding OPEC+, oil prices have rebounded because lower prices always and invariably stimulate greater demand for an essential commodity such as crude oil. Brent is back above $60 per barrel, and WTI has recovered to $58. This, of course, does not mean prices can’t fall again and stay fallen for an extended period of time. Perhaps at some point, it would even become officially clear whether the Saudis are doing Trump’s bidding or simply looking after their own interests as they have done repeatedly over the years. In the meantime, OPEC’s competitors will be suffering. This might even be one big reason why the cartel is adding supply if history is any indication.
India’s Natural Gas Challenge: Escaping the vicious price-demand loop
India aims to raise natural gas’s share in its energy mix to 15% by 2030, positioning it as a cleaner alternative to coal and a transitional fuel for a sustainable future. As a “bridge fuel,” it offers lower carbon intensity and supports rising energy needs, but the key question remains: are current efforts enough to meet this goal? Expanding City Gas Distribution (CGD) networks, investing in LNG terminals, and laying thousands of kilo-meters of pipelines certainly suggest unstoppable momentum. The increase from 54 Geographical Areas (GAs) in 2013 to 307 by 2024reflects a remarkable rise achieved through multiple bidding rounds, including the 12th CGD Bidding Round concluded in March 2024, which sought to achieve 100% national CGD coverage. Despite the significant expansion of City Gas Distribution (CGD) coverage following the 9th and 10th bidding rounds, where the majority of newly licensed Geographical Areas (GAs) were concentrated in the eastern, northeastern, and southern regions of India, recent consumption data suggests that gas uptake in these regions remains relatively low. For instance, as of February 2025, Petroleum Planning and Analysis Cell (PPAC) data shows that Arunachal Pradesh, Odisha, West Bengal, and Chhattisgarh, states that gained coverage in later bidding rounds, record total CGD consumption of just 0.11, 2.94, 2.37, and 0.18 MMSCMD, respectively. In contrast, legacy CGD markets such as Gujarat (372.16 MMSCMD), Maharashtra (230.76 MMSCMD), and Delhi (157.94 MMSCMD) continue to dominate overall demand.
Construction of the $20 Billion Mozambique LNG Project to Resume by Mid-Year
TotalEnergies and Bharat Petroleum Corporation Limited (BPCL) have noted that the long-awaited Mozambique LNG project is expected to commence implementation in July 2025. The project was halted in March 2021 after militant attacks in Cabo Delgado province, when operator TotalEnergies SE invoked force majeure. The project is now progressing, however, with security becoming better and the U.S. Export-Import Bank reaffirming its $4.7 billion funding pledge. This move is set to revive one of Africa’s most ambitious energy ventures. The Mozambique LNG project has been the recipient of significant foreign investment, with BPCL owning a 10% interest in the project via its subsidiary BPRL Ventures Mozambique BV. While the project is important to many countries, its most significant impact will be experienced by Mozambique itself. With a scheduled end date of July 2028, the development could prove a game-changer for Mozambique’s economy and energy infrastructure, unlocking new avenues to an once-troubled region.
India’s Russian oil imports at 9-month high in April; uptick in US crude volumes
Russian oil flows to India touched a 9-month high in April primarily due to the abundant availability of Moscow’s crude for exports as well as the low oil prices, with the latter ensuring sufficient number non-sanctioned tankers to haul the oil to Indian ports without falling foul of international curbs April also saw India’s oil imports from the United States rise to an eight-month high, evidently on account of strategic trade considerations amid the evolving geopolitical and geoeconomic scenario. India’s Russian oil imports in April rose 2.1 per cent over March to 1.92 million barrels per day (bpd), even as overall oil imports contracted 7.3 per cent sequentially to 4.88 million bpd, per provisional tanker data from commodity market analytics firm Kpler. The share of Russian crude in India’s oil import basket rose to 39.3 per cent in April from 35.7 per cent in March.
Barclays cuts 2025, 2026 Brent crude forecast as OPEC+ accelerates output hikes
Barclays lowered its Brent oil price forecast by $4 per barrel to $66/bbl for 2025 and by $2 to $60/bbl for 2026, citing the decision by OPEC+ to accelerate oil production hikes. “Tariff-related developments have certainly been a drag but the OPEC+ pivot has also been a significant driver of the move lower in oil prices of late,” Barclays said in a noted dated Sunday. OPEC+, which includes the Organization of the Petroleum Exporting Countries and allies such as Russia, agreed to accelerate oil production hikes for a second consecutive month, raising output in June by 411,000 barrels per day, the group said on Saturday. OPEC+ sources have said Saudi Arabia is pushing the group to accelerate the unwinding of earlier output cuts to punish fellow members Iraq and Kazakhstan for poor compliance with their production quotas. Barclays noted that the OPEC+ decision is more related to strength in underlying fundamentals and external influence than concerns about member overproduction. Brent crude futures fell more than $2 a barrel in early trade on Monday, and traded at $59.20 as of 0250 GMT. Barclays now expects OPEC+ to phase out the additional voluntary adjustments by October 2025, but also expects slightly slower U.S. oil output growth. Overall, this loosens their balance estimates by 290 thousand barrels per day (kbd) for 2025 and 110 kbd for 2026, it said. Barclays also revised its baseline view on OPEC+, expecting the group to continue its accelerated path of phasing out additional voluntary adjustments, and now sees it taking effect in six months from the initial plan of 18. “That would result in 390 kb/d and 230 kb/d increases in our 2025 and 2026 OPEC crude forecasts, respectively,” Barclays said. Barclays now forecasts a decline in U.S. crude output by 100 kbd from the fourth quarter of 2024 to the fourth quarter of 2025, and by 150 kbd in 2026.
StanChart Cuts 2025 Oil Price Forecast By $16/bbl Amid Trump’s Tariffs
Previously, we reported that commodity analysts at Standard Chartered were bullish on oil prices in the current year, thanks to strong oil fundamentals, including declining U.S. supply growth and OPEC+ supply discipline. StanChart reported that non-OPEC+ supply growth fell sharply from 2.46 mb/d in 2023 to 0.79 mb/d in 2024, in large part due to a reduction in U.S. total liquids growth, which fell from 1.605 mb/d in 2023 to 734 kb/d in 2024. StanChart predicted this trend will continue over the next two years, with U.S. liquids growth clocking in at just 367 kb/d in 2025 and 151 kb/d in 2026. In contrast, a December survey by Haynes Boone LLC revealed that Wall Street is largely bearish, predicting that oil prices will fall below $60 a barrel by the middle of U.S. President Donald Trump’s term. Well, it appears that the bears can now take their victory lap, with even perma-bulls like StanChart throwing in the towel. StanChart has conceded there’s little hope for oil bulls, and has cut its 2025 forecast by $16 per barrel (bbl) to $61/bbl and its 2026 forecast by $7/bbl to USD 78/bbl. StanChart contends that the Trump administration will have a hard time convincing the markets that its tariff-based policies are not recessionary, with gloom already spreading in the markets after Washington released a worrying economic report on Wednesday. The U.S. economy shrank -0.3% in the first quarter, marking the first contraction in three years as companies went on a buying spree of foreign goods before Trump’s 90-day pause on final tariffs comes to an end. Thankfully, financial markets avoided going into a meltdown after that report, with the U.S. labor markets remaining relatively healthy. The U.S. economy added 177,000 jobs in April, slightly lower than 185,000 added in March, with the unemployment rate remaining unchanged at 4.2%. StanChart is also pessimistic about the prospects of some OPEC+ members meeting their output commitments. To wit, the commodity analysts have noted that Kazakhstan has so far been unable to deliver any compensation as earlier agreed. Kazakhstan’s crude output has lately surged, hitting a record high of 2.12 million b/d in February, good for a large 13% increase from January volumes and well above the country’s OPEC+ quota of 1.468 million bpd. Saudi Arabia is mad at quota violators such as Kazakhstan and Iraq for repeatedly exceeding their set targets, and is ready to open the taps. Whereas the current Brent price is more than $30/bbl below the $96.20/bbl that Saudi Arabia requires to balance its books, OPEC’s largest producer has ample alternative funding options it can rely on to weather low oil prices, including issuing sovereign debt or tapping foreign exchange reserves. The experts have also pointed out that Saudi Arabia can take advantage of the low tariff rates on GCC nations by the Trump administration by becoming a regional manufacturing powerhouse. Trump slapped all six GCC nations with 10% tariffs. “As tariffs rise in certain countries, we are likely to see a growing shift of business to the GCC [Gulf Cooperation Council], whether through nearshoring or friendshoring,” Adel Hamaizia, a Gulf expert at the Harvard Belfer Center Middle East Initiative, told Middle East Eye. “Saudi Arabia should be sending their trade representatives to the Trump administration right now, asking, ‘What was China providing you. Tell us what it is and we will make it in Saudi Arabia and provide a great trade deal’,” Ellen Wald, founder of the energy consulting firm, Transversal Consulting, told MEE. Manufacturing is a big part of MBS’ Vision 2030. Unlike Europe, Saudi Arabia has ready access to lots of cheap energy, minimal regulations and plenty of open spaces. Further, Saudi Arabia has laid out plans to accelerate its $2.5 trillion mining programs in a bid to diversify its economy and lower its reliance on oil. Mining will play a key role in Riyadh’s strategy to reduce oil dependency, with Saudi Arabia looking to exploit its significant reserves of copper, bauxite, phosphate and gold. Last year, the country’s mining minister, Bandar Al-Khorayef, announced that the Kingdom’s reserve potential had grown to $2.5 trillion, a big 90% jump from the $1.3 trillion forecasted eight years ago. Saudi Arabia has a goal for the mining sector to contribute $75 billion to the country’s economy by 2035, up rom $17 billion currently.
Indian Refiner BPCL Looks to Source Cheaper U.S. LPG in Swap Deal
Indian state-held refiner and fuel retailer Bharat Petroleum Corporation Ltd (BPCL) is in discussions with suppliers to swap a Middle East cargo with liquefied petroleum gas (LPG) with cheaper supply from the United States, the refiner’s head of finance, Vetsa Ramakrishna Gupta, said on Friday. “We are approaching suppliers. We see little bit of opportunity in terms of U.S. LPG. We are expecting a net benefit of $20 to $30 per ton,” Reuters quoted Gupta as telling analysts today. The U.S.-China trade war has widened the discount of U.S. LPG to Middle Eastern supply as trade routes to Asia have been upended. Currently, India receives over 80% of its LPG supply via annual contracts with Middle Eastern exporters including top OPEC producers Saudi Arabia, the United Arab Emirates (UAE), Kuwait, as well as Qatar. Increased supply of U.S. petroleum and other energy products to India could dovetail with the Indian government’s goal of boosting energy imports from the United States pending tariff and trade talks. India is ramping up purchases and imports of crude oil from the United States ahead of crucial talks on the U.S. tariffs this month. As many as 11.2 million barrels of U.S. crude are on route to arrive in India in June, per data from analytics firm Kpler cited by Bloomberg. This would be the highest U.S. crude volume arriving in India since August 2024. India’s state-owned refining giants are leading the higher purchases of U.S. crude, as India hopes to have tariffs lowered if it buys more American energy products. State Indian refiners, including BPCL and Indian Oil Corporation, have bought at tenders this month at least 6 million barrels of crude from the U.S. due to arrive in India in June, Bloomberg calculations showed. Most Asian countries are racing to pledge increased imports of U.S. energy to avoid the high tariffs slapped on them in early April. Delegations from many Asian countries are heading to Washington D.C. these days to discuss the U.S. tariffs, which are the highest for economies in Asia and Southeast Asia.
BPCL refineries utilise 115 pc capacity at record 40.5 mn tonnes in FY25: Hardeep Puri
Minister of Petroleum and Natural Gas, Hardeep Singh Puri, on Friday lauded the performance of Bharat Petroleum Corporation Ltd (BPCL), as the government-owned oil major has achieved its highest-ever refinery throughput of 40.5 million metric tonnes with 115 per cent capacity utilisation and made a net profit of Rs 132.75 billion for 2024-25. The minister held a meeting with BPCL chairman and managing director Sanjay Khanna to review the performance of the Maharatna oil PSU. Khanna holds the additional charge as CMD of the company. “During 2024-25, the company has achieved highest ever market sales of 52.4 MMT beating earlier record of 51.0 MMT, highest ever refinery throughput 40.5 MMT with 115 per cent capacity utilisation, Highest capex of Rs 170 billion, outstanding gross refining margin 6.82 $/bbl and Rs 132.75 billion profit after tax,” the minister posted on X. He further stated that BPCL has commissioned a 5 MW GH2 at Bina refinery in just 15 months, setting a benchmark for rapid and cost-effective execution. This initiative forms a core part of BPCL’s strategy to achieve Net Zero for Scope 1 and Scope 2 emissions by 2040 to contribute towards India’s green energy transition.
Trump & Tariffs: India’s crude oil purchases from the US to surge in April-June
India and the US deliberate on the fine print of a bilateral trade deal, the world’s third largest crude oil importer is expected to buy more than 1 million barrels per day (mb/d) from the US during April-June 2025—a record high. This is in line with India’s stated position to enhance annual energy imports from the US to $25 billion from $15 billion currently. Both crude oil and liquefied natural gas (LNG) purchases from the US are already at a record high in 2024 calendar year (CY). According to global real-time data and analytics provider Kpler, India’s crude oil imports from the US rose 17 per cent m-o-m and 68 per cent y-o-y to roughly 337 thousand barrels per day (kb/d) last month—an eight-month high—provisionally. April is the third consecutive month with in-bound shipments clocking higher volumes. As per Kpler data, India is likely to import around 1,007 kb/d of crude oil from the US during April to June this CY, which is higher by 29 per cent y-o-y and more than double the imports during Q2 2023. The US EIA data also points to a similar dynamic. India imported around 942 kb/d during April-June 2024, which is 43 per cent higher than Q2 2023 and 35 per cent higher than Q2 2022. Imports during Q2 2024 are the highest on record, barring the Covid-impacted Q2 2021 when cargoes touched 1,355 kb/d as prices hit rock bottom. Trade & Geopolitics Sumit Ritolia, Kpler’s Lead Research Analyst for Refining & Modeling, told businessline: “US crude imports by Indian refiners—particularly public sector entities—are shaped by a mix of geopolitical considerations and trade diversification efforts. While diplomatic balancing may justify one or two cargoes, refinery economics ultimately drive sustained buying. Currently, discounted WTI prices are being used to stimulate Asian demand amid weakening Chinese appetite.” US EIA in its December 2024 Short Term Energy Outlook, said that India emerged as the leading source of growth in global oil consumption in 2024 and 2025, overtaking China this year. This is important considering China’s oil consumption outpaced India’s almost every year from 1998 through 2023. Ritolia explained that the exemption on crude oil and natural gas from tariffs, offers a strategic avenue to increase US energy imports without incurring additional tariff costs. “Data indicates a significant uptick in US crude oil imports by India. In April 2025, imports reached around 337 kb/d. State-run refiners, including Indian Oil Corporation and Bharat Petroleum, have been at the forefront of this increase, accounting for over 70 per cent of the imports. This shift underscores a strategic pivot towards US energy sources, aligning with broader trade objectives,” he said. Crude from the US offers a viable option, providing high-quality, light-sweet grades that are well-suited for India’s refining capacities. “Additionally, increased US imports help mitigate over-reliance on Middle Eastern suppliers, enhancing energy security. Also, Nigeria and Angola may see their volumes to India fall as US supply gains ground. Strategic preference for light sweet grades amid reduced arbitrage from West Africa,” he added.
Indian refiners target cheaper US LPG imports with help from China tariffs
Chinese import tariffs have unwittingly come to India’s assistance to help boost imports of US liquefied petroleum gas (LPG) at rates cheaper than what it pays for supplies from West Asia, according to industry sources and shipping data. After stepping up crude imports and tying up US liquefied natural gas (LNG) supplies, Indian state-run oil companies are evaluating options for LPG imports from the US in July, directly under term contract arrangements — when they begin talks to secure shipments of the cooking fuel for 2026, top refining sources told Business Standard. Talks are also on to secure cheap US LPG in the immediate term in exchange for contracted West Asian supplies. India is a $12 billion LPG market, equivalent to a third of its trade surplus with the US for 2024. India’s LPG market is dominated by supplies from United Arab Emirates, Qatar, Kuwait, and Saudi Arabia. The advent of US LPG will enhance India’s security of supply for a sensitive fuel, used in kitchens across the nation, an official said. India imported around 20.8 million tonnes of LPG, around 66 per cent of its needs, in 2024-25, according to oil ministry data. The US share was negligible. “Cheap US LPG is flooding the market,” an official from a state refiner said, adding that with the right discounts US suppliers could capture a large portion of the Indian LPG market, just as discounted Russian oil gobbled up 40 per cent of India’s crude oil import business after the war in Ukraine and accompanying sanctions, the official said. It depends on how long the Chinese import tariffs last, another official said. The availability of US LPG was driven by the steep 145 per cent tariffs imposed by the Trump administration last month on most Chinese imports, leading to China retaliating with a 125 per cent charge on US purchases.