Oil Prices Are on Course for Another Weekly Slump
Crude oil prices were on track to book their second consecutive weekly loss as markets reel from Trump’s tariff offensive, although they stabilized somewhat after the U.S. president announced a 90-day pause on the levies. At the time of writing, Brent crude was trading at $63.01 per barrel, with West Texas Intermediate at $59.74 per barrel. The weekly change in the prices is not very radical, compared with last week’s drop, thanks to the pause that Trump took markets by surprise with on Thursday. The weekly loss for Brent crude, according to Reuters, will be 4% and the loss for WTI is estimated at 3.8%. Last week, both benchmarks shed as much as 11%. “While the pause offers some relief to markets, there’s still plenty of uncertainty on the trade front,” ING commodity analysts Warren Patterson and Ewa Manthey wrote in a note earlier today. “This uncertainty is still likely to drag on global growth, which is clearly a concern for oil demand. Still, conditions are not looking as bad as they were just a few days ago.” The main factor exerting pressure on oil prices continues to be fear of a global recession, as the effect of the tariff pause is yet to be processed by market players fully. ANZ analysts have estimated that if global economic growth slows to below 3%, oil consumption will shed 1%. For now, the situation remains uncertain, with both the United States and China signaling they were willing to negotiate a deal but keeping the pressure on the other, too. China’s latest retaliatory move after Trump imposed more tariffs on Chinese imports was to restrict imports of Hollywood movies. The move appears to be largely symbolic, according to analysts, because Hollywood productions have been generating diminishing returns in China over the past few years, Reuters reported.
Petronet LNG To Establish 50,000 MT Land-Based Terminal At Odisha’s Gopalpur Port, Marking First On India’s East Coast
Petronet LNG Ltd (PLL) is set to establish a 50,000 MT land-based LNG terminal at Gopalpur Port in Odisha’s Ganjam district, marking its first such facility on India’s east coast. This landmark project is part of the ₹ 988.80 billion investment commitments secured by the state during a two-day Investors’ Meet recently held in New Delhi, highlighting Odisha’s focus on strengthening its energy infrastructure. Initially conceived as a Floating Storage Regasification Unit (FSRU) with a capacity of 4 MMTPA, the project has now evolved into a larger 5 MMTPA land-based terminal, further boosting the country’s LNG regasification capacity. Petronet’s terminal and ancillary industries are expected to play a crucial role in driving this employment boom. One of the most significant announcements came from Indian Oil Corporation Ltd (IOCL), whose Dual-Feed Naphtha Cracker Project in Paradip (Jahatsinghpur district) alone will attract over ₹ 580.42 billion in investment and create jobs for 24,000 people.
Oil companies’ losses on LPG will reduce to Rs 160/cyl with Rs 50 hike in prices from this month: Report
Oil marketing companies (OMCs) are likely to reduce losses on selling domestic LPG cylinders over the next few months due to the recent LPG price hike and falling international fuel prices, according to a report by Antique Stock Broking. The government has increased the prices of LPG cylinders by Rs 50 from April. It has also raised excise duty on petrol and diesel by Rs 2 per litre. According to the report, the LPG price hike is clearly aimed at covering the under-recoveries, or losses which OMCs are facing while selling LPG cylinders below the cost. These under-recoveries were becoming a financial burden. It said, “With the latest hike, LPG losses will fall to INR 160/cyl in May-25, which we estimate will decline to INR 60/cyl by 2QFY26”. The report estimated that losses on LPG will fall to Rs 160 per cylinder in May 2025, and further reduce to just Rs 60 per cylinder by the second quarter of the financial year 2025-26 (July to September 2025). These lower losses are expected because of a fall in crude oil prices and a seasonal drop in international propane prices, especially from Saudi Arabia. Propane prices are likely to fall by USD 85 per tonne, reaching around USD 525 per tonne by August. By August, LPG under-recoveries could fall further to Rs 60 per cylinder and may even come down to zero if these trends continue. The report also mentioned that even if retail fuel prices are cut in the coming months, as long as crude oil remains around USD 65 per barrel, OMCs will still earn enough from their marketing margins to cover any losses in refining. The report said OMCs are currently in a good position. They are enjoying strong profits from auto fuel sales, and Singapore refining margins (also known as GRMs) are also expected to improve. This is because of ongoing refinery shutdowns, better pricing between light and heavy crude oils, and the rollback of supply cuts by oil-producing countries. Additionally, the report added that Saudi Arabia is expected to lower its official selling price (OSP), which will also help improve refining margins.
Standard Chartered: Time To Dial Down the Oil Panic?
Oil prices earned an unexpected reprieve on Wednesday afternoon, regaining over 3% immediately following U.S. President Donald Trump’s surprise decision to pause reciprocal tariffs for 90 days for all except China. After flirting with prices below $60, Brent crude was trading up 3.41% at 2:56 p.m. ET, while WTI was trading up 3.74%, breaching the $61/barrel mark. This week, Brent crude at one point dipped below $60 per barrel after OPEC+ revealed plans to accelerate its phase-out of production cuts. Brent crude for May delivery sank 6.3% to $58.68 per barrel at 8.00 am ET, a level they last touched more than four years ago, while WTI fell by 6.2% to $55.20 per barrel. Last week, eight OPEC+ countries unveiled plans to advance their planned phase-out of voluntary oil output cuts by ramping up output by 411,000 barrels per day in May–equivalent to three monthly increments. The announcement of the accelerated pace of unwinding of production cuts comes at a time when U.S. President Donald Trump announced tariffs on trading partners, deepening the shock to oil markets. And now commodity analysts at Standard Chartered have weighed in, saying the latest twist in the OPEC saga was to be expected as the likes of Saudi Arabia looked to make a strong statement against freeloaders like Kazakhstan and Iraq that consistently failed to compensate for past overproduced volumes, “In our view, the major underlying story is that Saudi Arabia will want to accelerate the phasing out of voluntary cuts unless all partners involved fulfill their promises, adding to the raft of warnings given recently to any country seeking to free-ride on the compliance of others,” StanChart recently predicted. Last month, we reported that Kazakhstan has ramped up oil production, with the country’s crude oil and gas condensate–a type of light oil- output hitting a record high of 2.12 million barrels per day in February, good for a 13% increase from January. Excluding gas condensate, crude oil production increased 15.5% m-o-m to 1.83 million bpd. The OPEC+ member has been able to increase oil output despite damage to the Caspian Pipeline Consortium (CPC), its main export route via Russia. Kazakhstan has repeatedly exceeded its OPEC+ output quota of 1.468 million bpd. Last year, Kazakhstan, Russia and Iraq submitted their compensation plans to the OPEC Secretariat for overproduced crude volumes for the first six months of 2024. According to OPEC, the entire over-produced volumes were to be fully compensated over the next 15 months through September 2025, with Kazakhstan ‘paying back’ a cumulative 620 kb/d, Russia 480 kb/d and Iraq 1,184 kb/d. Unfortunately, these countries have only been paying lip-service with their promises to cut back production, with Saudi Arabia and its OPEC+ allies finally deciding to do something about the long build-up and the catalogue of missed promises. The bad news: StanChart has predicted that OPEC+ is unlikely to change its stance in relation to the overproducers, unless, in the unlikely event, that Iraq and Kazakhstan are able to reach their targets, and submit revised plans for significantly more front-loaded cuts in order to compensate for past overproduction. In other words, there’s a significant risk that the markets could soon be flooded with oil, which comes at a bad time when Wall Street is sounding the alarm on the growing risk of a recession. JPMorgan has raised the odds of a U.S. and global recession this year to 60% from 40% previously, thanks in large part to Trump’s tariffs. JPM CEO Jamie Dimon has also revealed that IPOs were already being canceled amid market volatility. On a brighter note, StanChart remains bullish about oil market fundamentals, saying the scale of the acceleration is not large enough to lead a Q2 supply surplus given the tightness of the immediate market. Further, the commodity experts say the latest OPEC+ move is likely to enhance future production discipline and compliance with set targets and quotas. StanChart says non-OPEC+ producers, U.S. shale in particular, are not the focus of the accelerated phase out. If anything, the move is a big gift to Trump who has been urging the cartel to increase production in a bid to lower oil and fuel prices. Last year witnessed a sharp slowdown in non-OPEC+ supply growth from 2.46 mb/d in 2023 to 0.79 mb/d in 2024, primarily caused by a reduction in U.S. total liquids growth from 1.605 mb/d in 2023 to 734 kb/d in 2024. StanChart expects this trend to continue, with U.S. liquids growth expected to clock in at just 367 kb/d in 2025 before slowing down further to 151 kb/d in 2026. Stanchart says the U.S. slowdown and a long tail of declines will keep non-OPEC supply growth well below 1 mb/d over the next couple of years despite some areas of solid growth in Brazil, Canada and Guyana.
Is Oil Demand About to Surge?
Benchmark oil prices hit the lowest level since the pandemic panic on Wednesday. Once again, the slump is caused by panic—this time, market panic as U.S. President Donald Trump keeps turning up the tariff heat. For now, everyone seems to be in the grip of fear about what tariffs would do to oil demand. But there is one thing that low prices will definitely do: stoke up demand. The latest oil price crash came Tuesday after Trump said he would impose an additional 50% tariff on Chinese imports following China’s retaliation against the last round of tariffs, which saw it add 34% to U.S. imports, matching the U.S. tariff rate. Trump called on China to remove the retaliatory tariff. China refused. Trump slapped it with that 50%, bringing the total to 104%. Brent crude has breached the $60 threshold, and West Texas Intermediate traded at just above $56 per barrel before soaring again after Trump announced a 90-day pause on tariffs for a large number of nations, but lifted those for China. In the meantime, Asian oil imports are on the rise. Reuters’ energy columnist Clyde Russell reported the latest changes in imports for the first quarter, noting that while January and February saw weaker imports of crude than last year, March marked a turnaround. Russell attributed the turnaround to refinery restocking and prices. Brent crude has dropped by more than $20 per barrel since January, and, per LSEG data cited by Russell, Chinese refiners had been drawing on their stocks in the first two months of the year, so some replenishment was in order. Now, the important question is whether the increase in imports will continue. With prices where they are, there is a pretty good chance they will. China has built a reputation for being quick to recognize a good bargain, and it will continue to take advantage of such bargains amid the price rout. It won’t be just China, either. Cheap oil is good news for every consumer country, so chances are demand will strengthen in the coming weeks and months—unless the disastrous economic growth projections that analysts have been in a rush to produce since the beginning of the tariff war materialize. The chief argument in those projections is that tariffs add to the cost of a product, which results in higher end-prices, in turn prompting lower demand for that product. Yet, currently, tariffs are causing a price crash in energy commodities, and when energy commodities are cheap, end products are cheap, too. In other words, the effect of the tariffs on energy commodities might, somewhat ironically, offset some of the effect that tariffs are having on end-prices of tariffed commodities and products. “China’s 50,000 bpd to 100,000 bpd of oil demand growth is at risk if the trade war continues for longer, however, a stronger stimulus to boost domestic consumption could mitigate the losses,” Rystad Energy’s vice president for oil commodity markets, Ye Lin, told Reuters this week. True as that might be from a certain perspective that focuses on the primary effect of tariffs on goods, another perspective that takes into account the effect of prices on energy commodity prices suggests that the effect might be less dramatic than that. Put simply, when gas is cheap, people travel more—and refineries stock up, even if there is no immediate demand for more of their products. Also, the prices of things made using oil decline, too. It is still early days, however. The full effect of Trump’s tariffs has yet to be known, although the U.S. president has already demanded that the European Union buy more U.S. oil and gas to eliminate its trade surplus with Washington. Speaking in numbers, Trump has demanded that the EU buy $350 billion worth of U.S. energy commodities – with the current price rout, that would mean more oil and LNG than just a month ago. Also, China has already started reselling its U.S. LNG cargoes to the EU, so that’s even more supply that would eventually push down prices as long as tariffs remain in place. This is, in fact, the biggest question of all: how long will the tariff war last. The longer it does, the more pronounced the effects on actual physical markets will become. If the war ends in a couple of weeks, oil prices will rebound immediately, even with OPEC’s surprising decision to add 411,000 bpd to its daily supply. In the meantime, the slump in oil prices is a good, if not painful, way to gauge the health of the physical demand for oil. Futures markets are all everyone looks at—along with Chinese economic figures—but physical demand is the real thing. If cheap oil pushes demand higher, as it has always done before, except in force majeure circumstances such as pandemic lockdowns, then prices will eventually start climbing. If physical demand is organically weak, low prices will only sink lower.
GAIL establishes wholly owned subsidiary in IFSC at GIFT City, Gujarat
State run Gas utility firm, Gail (India) Ltd has incorporated a wholly owned subsidiary, Gail Global IFSC Ltd with authorised share capital of Rs 170 million with initial paid up capital of Rs 85 billion. The subsidiary will operate as a finance company in IFSC GIFT City, Gujarat to undertake Global and Regional Corporate Treasury Centers activities. The Ministry of Petroleum and Natural Gas has conveyed the approval of DIPAM for the formation of a wholly owned subsidiary of Gail in the International Financial Service Center at GIFT City in Gujarat.
Oil Price Slump, Tariffs Hit Oilfield Services Sector
Oil prices dropped off a cliff last week after President Trump announced a barrage of tariffs on global trading partners, triggering panic in the trading world. The effect has now rippled across the energy industry, set to discourage production growth—and hurt oilfield service companies. The sector was already worrying about the steel and aluminum tariffs that President Trump introduced last month as part of his radical efforts to revive U.S. industries. The tariffs stand at a hefty 25% and apply to all steel and aluminum imports into the United States. Initially, the effect on the oil and gas industry looked somewhat muted because industry players were not overwhelmingly dependent on imported steel and aluminum. Now, coupled with the tariffs on everything else that pushed oil to the lowest in more than three years, the effect is shaping up to be more pronounced. “Pipes, valve fittings, sucker rods are going to be impacted by tariffs, which will be felt by the big three in particular where they have multi-national sourcing strategies,” Ryan Hassler, vice-president of supply chain research at Rystad Energy, told Reuters recently in comments on the effect of tariffs on the oilfield sector specifically. The publication also reported that Morningstar had reduced its fair value estimates on the three biggest oilfield services majors, expecting them to book a revenue drop of between 2% and 3% this year. Each dollar in lost revenue, the report said, translated into an operating profit loss of between $1.25 and $1.35. A revenue drop of 2-3% is not exactly an unmanageable loss, despite the knee-jerk reaction of traders that saw shares in the big three oilfield service companies take a dive alongside crude last week. Yet it is early days, and the full impact of the tariffs on the energy industry is still to unfold. The focus of this impact will be on drilling activity. As international benchmarks drop, exploration and production companies are going to shrink their drilling plans and hunker down to wait out the downturn, because this is exactly what it is. Oil prices tanked at the end of last week after China retaliated against the fresh 34% tariffs that Trump announced for Chinese imports into the United States with its own 34% additional tariffs—on everything that comes from the U.S. The effect on prices was only natural, given the size and importance of China as an oil importer, as well as an importer of a lot of other things that the U.S. exports to the Asian powerhouse. With the trade war between the two heating up, market players are not feeling a lot of optimism, which has hit oil prices, and with them, the outlook for the oilfield service industry—and it wasn’t particularly bright to begin with. In its latest quarterly energy survey, the Dallas Fed reported that the U.S. oil industry needed oil prices of between $25 per barrel and $45 per barrel to cover its operating expenses across shale and conventional oil. However, they needed prices of between $61 and $70 per barrel to be profitable. West Texas Intermediate is currently trading around $60, and it may have further to fall because OPEC+ decided to change price control tactics at the worst—or best, depending on perspective—time. A day after President Trump announced his latest tariffs, the cartel said it would boost production by three times the amount it initially planned to in May. Instead of 135,000 barrels daily, the group will now add 411,000 bpd to total production next month, citing the “continuing healthy market fundamentals and the positive market outlook.” A lot of commodity analysts would disagree with this perception as they predict a slump in global demand for oil as previously thriving economies grind to a halt amid the tariff push. Yet OPEC+ has run out of options, and it has had to deal with several countries that have consistently failed to stick to the production quota. If it couldn’t get them in line the easy way, it was time for the hard way. All this is quite bad news for the oilfield services sector, which was already having trouble before the whole tariff thing began. Following the string of megadeals in the exploration and production sector, oilfield services companies were faced with a much smaller pool of clients with much more concentrated pricing power. Not only that, but demand shrank, too, with companies combining their operations, as Energy Secretary Chris Wright, then still CEO of Liberty Energy, explained last year. This was supposed to prompt a similar consolidation drive in oilfield services and the prompt will just get stronger with the tariff fallout and the OPEC tactic switch that played a rather instrumental part in last week’s oil price drop. Oilfield service companies are going to consolidate in order to survive. And there is always a silver lining: price routs in oil, whatever the reason, are invariably followed by rallies.
China’s Multi-Month LNG Buying Strike is a Boon for Europe
The escalating trade war between the US and China could increase liquefied natural gas flows to energy-stricken Europe, as China remains on a multi-month buying strike. Bloomberg cited marine traffic data from Kpler, showing that no US LNG shipments are currently inbound or about to be inbound to China. “Zero LNG trade between China and the US is likely to continue for the rest of 2025, with a further increase in China’s tariff on US LNG from the previous 15% to 49%, as a counterstrike against Trump’s steepest tariffs,” Wei Xiong, head of China gas research at Rystad Energy, wrote in a note. She added, “In the meantime, we expect to see more reselling by Chinese companies.” On Feb. 10, China—the world’s largest LNG buyer—imposed a 15% tariff on US LNG shipments. Last week’s tariff escalation, which pushed Beijing’s effective tariff rate on US goods to around 54%, is expected to disrupt trade flows further. In President Trump’s first term, China paused US LNG shipments for about 400 days through April 2020. There’s no telling how long the current buying strike will last as both superpowers duke it out on trade. The good news is that some US trading partners, including Vietnam and Taiwan, have capitulated to the trade war. The other piece of good news is that US LNG shipments originally destined for China can be rerouted to Europe, offering relief as the energy-stricken continent works to replenish inventories after winter and offset the loss of Russian pipeline gas. Goldman’s Samantha Dart told clients late last year that American LNG could “theoretically” replace Russian LNG imports in the EU.
South Korea Seeks More U.S. LNG Imports to Fix Trade Imbalance
South Korea has thrown in the towel without a fight after the U.S. slapped tariffs on all of the country’s trade partners. Seoul is looking at more LNG imports to get Washington to drop the new tariffs. Per a Bloomberg report, the South Korean government is working on several packages of measures to be taken to erase the trade surplus it has with the U.S. in a bid to convince President Trump to remove the additional tariffs, with the focus on boosting imports instead of cutting exports. “We need to adjust the US trade balance, which is a surplus from our perspective, to reduce US tariffs,” South Korea’s trade minister, Cheong Inkyo, told media as quoted by Bloomberg ahead of a two-day trip to Washington. “It is difficult to reduce exports, so we need to increase imports.” South Korea has a very export-focused economy, which has served it well until now. Last year, the country booked a trade surplus of $55.7 billion with the United States, which automatically put it in the category of “abusers,” as President Trump called the countries running trade surpluses with the U.S. Trump slapped a 25% tariff on South Korean imports—one of the highest. “We’ve already expressed our regret about this, and this time, too, we will raise the fact that the US calculated such a high tariff rate for a country that has been implementing the Korea-US FTA for 12 years,” Cheong also told reporters. The range of tariffs that President Trump announced last week is between 10% and as much as 49%, with some of the United States’ biggest trade partners and closest allies getting a higher rather than a lower rate as they might have hoped for based on their geopolitical closeness with Washington. India, for instance, got slapped with a tariff rate of 26%. China, which the U.S. sees as a geopolitical adversary, was hit with a 34% additional tariff rate.
India’s oil minister flags higher petrol, diesel prices in Opposition-ruled states after hiking excise tax
Union Oil Minister Hardeep Singh Puri on Tuesday flagged his concerns over price differences between BJP and Opposition-ruled states, a day after excise duty on petrol and diesel were raised by Rs 2 per litre. “There is a difference of at least Rs 10-12 per litre in BJP-ruled states and Opposition-ruled states,” said Puri. The minister was speaking at CNN News18’s Rising Bharat Summit 2025. “Prices in BJP-ruled states have already started coming down. When prices went up internationally, we have tried to not hurt the consumers,” added Puri. The government hiked excise duty on petrol and diesel by Rs 2 per litre on Monday, using the opportunity provided by the falling international oil prices to shore up its revenue. Shares of state-run oil marketing companies gained up to 4% on Tuesday after the hike. The duty hike will not push up pump prices but the government has allowed companies to raise cooking gas prices on which there was no tax increase. Cooking gas or LPG prices will rise by Rs 50 per cylinder from Tuesday. After the hike, a 14.2 kg refill will cost Rs 553 to Ujjwala customers and Rs 853 to others in Delhi. The duty hike on petrol and diesel will fetch the government Rs 32,000 crore in additional revenue in a year. Monday’s duty hike falls into a pattern the government has followed for a decade – raising duties to mop up the gains from a decline in international oil prices leaving limited benefits for oil companies and consumers. The government raised duties on fuels after the international oil prices crashed in 2014-15 and in 2020. The government has also cut duties in the past ahead of elections as well as to ease inflationary pressures. The recent fall in global crude prices has not yet translated into a fuel price relief for Indians, yet. However, Oil minister Hardeep Singh Puri hinted at a ‘wait and watch’ approach with respect to a cut in petrol and diesel prices. In February, Nirmala Sitharaman had slashed personal income tax for the middle class, leaving a dent in the Centre’s direct tax revenue estimates. The Modi government also scrapped windfall taxes, giving major relief to oil companies like Reliance Industries, Nayera etc. As for the latest excise hike, Puri said the extra Rs 2 duty will add to the general kitty, and it will be utilized for reimbursing the LPG losses of the same (oil marketing) company.