Oil Outlook Takes a Beating from Trade War Jitters
Crude oil is set to end another week with substantial losses as markets reel from President Trump’s tariff offensive, despite the fact he pulled the punch at the last second. With one notable exception: China. As Beijing and Washington take turns to up the ante, the outlook for oil and energy in general has gone from bright to really dim. Brent crude is about to end this week relatively unchanged but down by $6 per barrel from a month ago. West Texas Intermediate has slipped below $60 per barrel and might spend some time there. The drop is all a result of the sudden change in the outlook for oil demand—because of Trump’s tariff war. “We are going into a recession,” Renaissance Macro Research’s head of economic research, Neil Dutta, wrote in a note cited by Bloomberg. “I don’t think it is especially controversial to say so.” The statement sums up the dominant sentiment among economic forecasters as well as, it seems, the majority of market players. Warnings of a recession have multiplied at bacterial-growth speed, and now even the Energy Information Administration at the U.S. Department of Energy is warning of the negative impact that the tariff war would have on oil demand. Bloomberg noted that oil prices have been trending down since Trump took office. At the time, the reason was the overwhelming expectation that the new U.S. president would somehow convince oil and gas producers to boost output even faster than they were already. When the industry made clear it had no intention of doing so, attention turned to Trump’s trade policies, which were a lot more controversial than his “Drill, baby, drill” dream. The logic of all the warnings and all the grim demand predictions is simple enough: tariffs would supercharge inflation, leading to an overall drop in spending. This, in turn, would destroy oil demand. The basis of that argument is sound—which is why Trump took all the forecasters by surprise when he instituted a 90-day pause on the massive tariffs he had announced earlier in the week in anticipation of their eagerness to negotiate new trade deals with the United States. The risk of a deep global recession just became a lot smaller. However, the tariff exchange between the U.S. and China has not stopped. A series of retaliatory tariff announcements had Trump in the lead with a tariff total of 145% on Chinese imports. China first raised the tariff to 85%, but has since upped its game and is now trailing him with a grand total of 125%. While traders and analysts processed the exchange, some observers were quick to comment that either Trump or China blinked first after both sides signaled they were open to a trade deal to replace the tariff race to the bottom. Trump himself said he would love to do a deal with Beijing. Beijing, for its part, said that it was open to negotiations, but they had to be based on mutual respect. This suggestion that the two sides were open to negotiations has done nothing for oil prices—yet. And there is a reason for that. China has been reducing its intake of U.S. crude since January when Trump took office. Indeed, U.S. oil exports to China have shrunk considerably since the start of 2025, amounting to just 1% of total oil imports by the world’s second-largest consumer. It bears noting that the U.S. has never been a top supplier of oil to China, with the 2024 total at a little over 200,000 barrels daily. Still, any negative trends in imports are inevitably going to affect prices, which is exactly what these trends did. “With China imposing 84% tariffs on goods from the US, the cost of US crude would be almost double — $51 a barrel more expensive, based on $61 WTI,” Ivan Mathews, head of APAC analysis for Vortexa, told Bloomberg this week. “This makes running US crude uneconomical for Chinese refiners.” This is not good news for U.S. producers, even though they were not shipping millions of barrels of crude to China. The oil market these days runs on perceptions rather than hard data, and the perception is that the tariff war is killing oil demand, so the outlook for oil demand is dimming. It may not remain dim for long, though. “I’m sure that we’ll be able to get along very well,” President Trump said on Thursday, referring to his Chinese counterpart Xi Jinping. “In a true sense he’s been a friend of mine for a long period of time, and I think that we’ll end up working out something that’s very good for both countries,” Trump said, quite likely creating some confusion among followers of current political events. If both sides in a tariff spat are willing to end the spat with a deal, then this greatly improves the chances of such a deal being done. If such a deal is indeed done, fears of a global recession and market crashes should dissipate—and so should any major worries about oil demand. If it takes nothing less than a global recession to stem growth in oil demand, then it’s safe to say that demand is quite solid.
BP bets on NEC-25 for gas surge, credits PM Modi’s reforms
Global energy giant BP Plc, which produces one-third of India’s natural gas, is targeting nearly 10 million cubic meters per day of additional output from the NEC-25 block in the Mahanadi basin, spurred by recent upstream reforms introduced by the Modi government. Its chief executive Murray Auchincloss said India’s upstream oil and gas policy overhaul through a new legislation has made several improvements important for foreign investors and will help attract global players. BP and its partner Reliance Industries Ltd (RIL) produce about 28 million standard cubic meters per day or almost a third of India’s total gas output, from their Krishna Godavari basin deepsea block KG-DWN-98/3 (KG-D6) in the Bay of Bengal. The two are now looking to put into production discoveries in the Block NEC-OSN-97/2 (NEC-25) off the Odisha coast. “Block NEC 25 represents an opportunity to unlock the hydrocarbon potential of a new hub on India’s East coast, with production potential of up to 9.9 mmscmd of gas,” Auchincloss said. “We and RIL with other industry operators in the area including ONGC are working with the Ministry of Petroleum and Natural Gas to progress development.” He did not elaborate. BP-Reliance had in 2012-13 proposed a USD 3.5 billion plan for developing 1.032 trillion cubic feet of inplace reserves discovered in NEC-25. But the plan was delayed because of a dispute with upstream regulator the Directorate General of Hydrocarbons (DGH) over technical aspects of the finds. They have renewed plans after the government led by Prime Minister Narendra Modi unveiled a series of reforms in recent years. “Working in our partnership, RIL and BP have already developed three projects in KGD6 Block, which together are currently producing 28 mmscmd of gas,” he said. “We are working on multiple options to augment and sustain gas production from KGD6, such as infill drilling in the R-Cluster and Satellites Cluster, and well workovers on MJ.” Besides, the partners have two other exploration blocks that they had won in different rounds of OALP bidding – KG-UDWHP-2018/1 and KG-UDWHP-2022/1. “If successful, discoveries could be developed using some already existing infrastructure,” he said. BP has been in India for over a hundred years, with its connection through lubricant seller Castrol. India is amongst the fastest growing economies in the world, backed by industrial growth, infrastructure development, a young population and urbanization, and this is reflected by growth in its primary energy usage, the BP head, who was in India earlier this month, said. “The country’s stable governance, policy support and access to a large high-capability talent pool makes investment here very attractive. Building on our long relationship, BP aims to be the trusted energy partner of choice to India. We will look to leverage and grow our current positions, bringing our global capabilities and technology to bear and deepening our partnerships,” he said. And among the factors making India an attractive investment destination is a legislation that amended the Oil Fields (Regulation and Development) Act of 1948 by expanding its scope to include shale oil, shale gas and coal bed methane, in addition to oil and gas, while introducing sweeping measures aimed at improving the ease of doing business as well as providing fiscal and policy stability aimed to attract domestic and international investment. The new legislation “made several improvements that are important for foreign investors like us,” Auchincloss told PTI in an interview. The BP CEO was in India earlier this month, during which he met Prime Minister Narendra Modi as well as Oil Minister Hardeep Singh Puri. “We believe the reforms can help mitigate risks and ensure operational clarity, creating an investor-friendly environment, supporting the modernisation of India’s oil and gas sector, and attracting global players,” he said. He was deeply appreciative of the amendments made in the oilfield act to ease the way for increased foreign investment. He assured the Prime Minister that BP was working to support India’s energy needs in line with Modi’s vision of energy security for India with support from the ministry. The new law gives policy stability and improved financial terms through a series of changes to the decades-old act. These include freedom to pursue international arbitration in the event of disputes, as well as offering a longer lease period. India, which is 85 per cent dependent on imports for meeting its oil needs and buys nearly half of its gas needs from overseas, in recent years has undertaken a series of upstream reforms aimed at encouraging discovery of more oil and gas through increased exploration and bringing them to production quickly. These include greater marketing freedom to producers and allowing companies to carve out areas for oil and gas exploration under the Open Acreage Licensing Policy (OALP). Last year, BP and RIL teamed up with state-owned Oil and Natural Gas Corporation (ONGC) to bid for an oil and gas exploration block. “RIL and BP teamed up with ONGC for the OALP-IX bid round to strengthen our bid for exploration rights in the Gujarat-Saurashtra basin. This was our first collaboration, bringing together ONGC’s experience as India’s largest oil and gas producer alongside the Reliance-BP joint venture’s technical expertise and private sector agility,” BP CEO said. “We believe such an approach supports India’s aim of boosting domestic production and reducing reliance on imports by attracting investment through OALP. Our collaboration, sharing knowledge and expertise, has the potential to improve efficiency in exploration and production processes.” Both Modi and Puri encouraged BP to participate in the current bid round under OALP. RIL holds 66.67 per cent stake in NEC-25 block, where 9 gas discoveries in the northern part and six in the southern area have been made. BP holds the remaining 33.33 per cent. Some of these discoveries had been relinquished for either not meeting timelines or being too small to develop. Besides upstream, BP has a substantial presence in the downstream sector through its joint venture with Reliance Jio. Jio-BP has close to 2,000 petrol pumps in the country and is setting up a chain of
Back to Russian gas? Trump-wary EU has energy security dilemma
More than three years after Russia’s invasion of Ukraine, Europe’s energy security is fragile. U.S. liquefied natural gas helped to plug the Russian supply gap in Europe during the 2022-2023 energy crisis. But now that President Donald Trump has rocked relationships with Europe established after World War Two, and turned to energy as a bargaining chip in trade negotiations, businesses are wary that reliance on the United States has become another vulnerability. Against this backdrop, executives at major EU firms have begun to say what would have been unthinkable a year ago: that importing some Russian gas, including from Russian state giant Gazprom, could be a good idea. That would require another major policy shift given that Russia’s invasion of Ukraine in 2022 made the European Union pledge to end Russian energy imports by 2027. Europe has limited options. Talks with LNG giant Qatar for more gas have stalled, and while the deployment of renewables has accelerated, the rate is not fast enough to allow the EU to feel secure. “If there is a reasonable peace in Ukraine, we could go back to flows of 60 billion cubic metres, maybe 70, annually, including LNG,” Didier Holleaux, executive vice-president at France’s Engie, told Reuters in an interview. The French state partly owns Engie, which used to be among the biggest buyers of Gazprom’s gas. Holleaux said Russia could supply around 20-25% of EU needs, down from 40% before the war. The head of French oil major TotalEnergies, Patrick Pouyanne, has warned Europe against over-relying on U.S. gas. “We need to diversify, many routes, not over-rely on one or two,” Pouyanne told Reuters. Total is a large exporter of U.S. LNG and also sells Russian LNG from private firm Novatek . “Europe will never go back to importing 150 billion cubic meters from Russia like before the war … but I would bet maybe 70 bcm,” Pouyanne added. GERMAN PIVOT France, which produces large amounts of nuclear power, already has one of the most diversified energy supplies in Europe. Germany relied heavily on cheap Russian gas to help drive its manufacturing sector until the Ukraine war and has fewer options. In Leuna Chemical Park, one of Germany’s biggest chemical clusters hosting plants of Dow Chemical and Shell among others, some makers say Russian gas should return quickly. Russia used to cover 60% of local needs, mainly through the Nord Stream pipeline, which was blown up in 2022. “We are in a severe crisis and can’t wait,” said Christof Guenther, managing director of InfraLeuna, the operator of the park. He said the German chemical industry has cut jobs for five quarters in a row, something not seen for decades. “Reopening pipelines would reduce prices more than any current subsidy programmes,” he said. “It’s a taboo topic,” Guenther added, saying many colleagues agreed on the need to go back to Russian gas. Almost a third of Germans voted for Russia-friendly parties in the February federal election. In the state of Mecklenburg-Vorpommern, the east German region where the Nord Stream pipeline comes ashore after running from Russia under the Baltic Sea, 49% of Germans want a return to Russian gas supplies, a poll carried out by the Forsa institute found. “We need Russian gas, we need cheap energy – no matter where it comes from,” said Klaus Paur, managing director of Leuna-Harze, a mid-sized petrochemical maker at the Leuna Park. “We need Nord Stream 2 because we have to keep energy costs in check.” The industry wants the federal government to find cheap energy, said Daniel Keller, economy minister for the state of Brandenburg – home to the Schwedt refinery, co-owned by Russian oil firm Rosneft but held in German government trusteeship. “We can imagine resuming the intake or transport of Russian oil after peace is established in Ukraine,” Keller said. TRUMP FACTOR U.S. gas covered 16.7% of EU imports last year – behind Norway with 33.6% and Russia with 18.8%. Russia’s share will drop below 10% this year after Ukraine shut pipelines. The remaining flows are mainly LNG from Novatek. The EU is preparing to buy more U.S. LNG as Trump wants Europe to lower its trade surplus with the United States. “For sure, we will need more LNG,” EU trade commissioner Maros Sefcovic said last week. The tariff war has strengthened Europe’s concern about reliance on U.S. gas, said Tatiana Mitrova, a research fellow at Columbia University’s Centre on Global Energy Policy. “It’s becoming increasingly difficult to regard U.S. LNG as a neutral commodity: at a certain point it might become a geopolitical tool,” Mitrova added. If the trade war escalates, there is a small risk the United States could hold back on LNG exports, said Arne Lohmann Rasmussen, chief analyst at Global Risk Management. A senior EU diplomat, speaking on condition of anonymity, agreed, saying no one could rule out “that this leverage is used”. In the event U.S. domestic gas prices surge because of rising industrial and AI demand, the U.S. could curtail exports to all markets, Warren Patterson, head of commodities strategy at ING, said. In 2022, the EU set itself a non-binding goal to end Russian gas imports by 2027, but has twice delayed publishing plans on how. An EU Commission spokesperson declined to comment on the companies’ comments. ARBITRATION Several EU firms have opened arbitration cases against Gazprom for non-delivery of gas following the Ukraine war. Courts awarded Germany’s Uniper and Austria’s OMV 14 billion euros and 230 million euros respectively. Germany’s RWE has claimed 2 billion euros, while Engie and other firms have not disclosed their claim. Engie’s Holleaux said Kyiv could allow Russia to send gas via Ukraine to meet arbitration repayments as a starting point of resuming contractual relationships with Gazprom. “You (Gazprom) want to come back to the market? Very good, but we won’t sign a new contract if you don’t pay the award,” Holleaux said. The return of Russian gas worries Maxim Timchenko, the chief of DTEK, Ukraine’s private gas company, which
US sanctions Indian national, 2 India-based entities for transporting Iranian petroleum
The US has sanctioned a United Arab Emirates-based Indian national and two India-based entities operating as part of Iran’s “shadow fleet” and involved in shipping Iranian oil. Jugwinder Singh Brar owns multiple shipping companies that boast a fleet of nearly 30 vessels, many of which operate as part of Iran’s “shadow fleet”, the US Department of the Treasury said in a statement on Thursday. In addition to his UAE-based businesses, Brar owns or controls India-based shipping company Global Tankers Private Limited and petrochemical sales company B and P Solutions Private Limited. The Treasury Department’s Office of Foreign Assets Control (OFAC) designated Brar, two UAE and two India-based entities that own and operate Brar’s vessels that have transported Iranian oil on behalf of the National Iranian Oil Company (NIOC) and the Iranian military. Brar’s vessels engage in high-risk ship-to-ship (STS) transfers of Iranian petroleum in waters off Iraq, Iran, the UAE, and the Gulf of Oman, the agency said adding that these cargoes then reach other facilitators who blend the oil or fuel with products from other countries and falsify shipping documents to conceal links to Iran, allowing these cargoes to reach the international market. “The Iranian regime relies on its network of unscrupulous shippers and brokers like Brar and his companies to enable its oil sales and finance its destabilizing activities,” Secretary of the Treasury Scott Bessent said, adding that the US remains focused on disrupting all elements of Iran’s oil exports, particularly those who seek to profit from this trade. Brar is a ship captain and owner and director of UAE-based companies Prime Tankers LLC and Glory International FZ-LLC. Through his companies, Brar owns, operates, or manages a fleet of nearly 30 oil and petroleum product tankers, the majority of which are Handysize tankers that stick to coastal waters and carry a fraction of the cargo of larger tankers. Brar uses these smaller vessels for STS transfers to load Iranian oil from other “shadow fleet” vessels or to load oil or fuel that is smuggled from smaller commercial and fishing vessels. These operations can sometimes take days to complete due to the numerous transfers required to fill a single tanker, the agency said. In this fashion, Brar has coordinated with Houthi financial official Sa’id al-Jamal’s illicit shipping associates on sanctions evasion tactics, specifically the use of smaller vessels in lieu of large oil tankers to obfuscate Iranian oil smuggling in and around the Persian Gulf and Khor al Zubair, Iraq. In 2023, the Glory International-operated and managed NADIYA smuggled Iranian oil on behalf of the Iranian military. The agency added that Brar’s smaller vessels also help obfuscate the movement of Iranian cargoes through STS transfers with sanctioned vessels, often while their Automatic Identification System (AIS) is disabled or manipulated to make the vessels falsely appear to be elsewhere. Brar’s vessels have been observed following high-risk STS patterns on numerous occasions in the waters off Iraq’s Khor Al Zubair and Umm Qasr ports, and near Iran, the UAE, and the Gulf of Oman. At this point, facilitators blend the Iranian oil or fuel with products from other countries and falsify shipping documents to conceal links to Iran, allowing these cargoes to reach the international market via larger tankers. Global Tankers is the owner or manager of a number of vessels in Brar’s fleet. Brar has likely also transported Iranian petroleum for his own personal profit because of its availability at lower prices due to the sanctions risk such cargoes carry. Many of Brar’s vessels that are known to have carried Iranian petroleum make frequent port calls at oil and gas terminals in India, including major ports located near two of B and P Solutions Private Limited’s branches. OFAC is designating Brar pursuant to an executive order for operating in the petroleum sector of the Iranian economy. Prime Tankers, Glory International, Global Tankers, and B and P Solutions Private Limited are being designated for being owned or controlled by, directly or indirectly, Brar. In multiple NIOC contracts signed throughout 2024 worth millions of dollars, Glory International-owned vessels Global Beauty and Global Eagle were selected to provide fuel oil bunkering services to vessels in Iranian waters. The actions have been taken following an Executive Order which targets Iran’s petroleum and petrochemical sectors, and marks the fifth round of sanctions targeting Iranian oil sales since President Donald Trump issued the National Security Presidential Memorandum, ordering a campaign of maximum pressure on Iran. As a result of today’s action, all property and interests in property of the designated persons described above that are in the United States or in the possession or control of US persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, individually or in the aggregate, 50 per cent or more by one or more blocked persons are also blocked. US sanctions generally prohibit all transactions by US persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. Violations of US sanctions may result in the imposition of civil or criminal penalties on US and foreign persons.
India’s New Oilfield Regulations Attract Investors – BP CEO
India’s upstream oil and gas policy overhaul through a new legislation has made several improvements important for foreign investors that can help attract global players, global energy giant BP’s CEO said. Parliament last month passed a bill that amended the Oil Fields (Regulation and Development) Act of 1948 by expanding its scope to include shale oil, shale gas and coal bed methane, in addition to oil and gas, while introducing sweeping measures aimed at improving the ease of doing business as well as providing fiscal and policy stability aimed to attract domestic and international investment. The new legislation “made several improvements that are important for foreign investors like us,” BP CEO Murray Auchincloss told PTI in an interview. The BP CEO was in India earlier this month, during which he met Prime Minister Narendra Modi as well as Oil Minister Hardeep Singh Puri. “We believe the reforms can help mitigate risks and ensure operational clarity, creating an investor-friendly environment, supporting the modernisation of India’s oil and gas sector, and attracting global players,” he said. He was deeply appreciative of the amendments made in the oilfield act to ease the way for increased foreign investment. He assured the Prime Minister that BP was working to support India’s energy needs in line with Modi’s vision of energy security for India with support from the ministry. The new law gives policy stability and improved financial terms through a series of changes to the decades-old act. These include freedom to pursue international arbitration in the event of disputes, as well as offering a longer lease period. India, which is 85 per cent dependent on imports for meeting its oil needs and buys nearly half of its gas needs from overseas, in recent years has undertaken a series of upstream reforms aimed at encouraging discovery of more oil and gas through increased exploration and bringing them to production quickly. These include greater marketing freedom to producers and allowing companies to carve out areas for oil and gas exploration under the Open Acreage Licensing Policy (OALP). BP already partners Reliance Industries in the eastern offshore KG-D6 block that produces about 28 million standard cubic metres of natural gas per day. Last year, BP and Reliance teamed up with state-owned Oil and Natural Gas Corporation (ONGC) to bid for an oil and gas exploration block. Both Modi and Puri encouraged BP to participate in the current bid round under OALP. “I encouraged the energy supermajor to aggressively participate in the 10th Round of OALP, the largest bidding round of over 0.2 million sq kms and the first one after the passage of the landmark ORD Act, 2025,” Puri had said after meeting the BP CEO last week. On the bid in OALP-IX round, Auchincloss said Reliance Industries and BP teamed up with ONGC for the OALP-IX bid round to “strengthen our bid for exploration rights in the Gujarat-Saurashtra basin.”
Oil India-CMC Ink CNG Deal
Oil India Limited (OIL) has signed a Memorandum of Understanding (MoU) with Coal Mines Company Limited (CMC) to establish a Rs 1.50 bn Compressed Natural Gas (CNG) plant, reinforcing India’s clean energy ambitions. Both OIL and CMC will work jointly on the project’s execution, with a strong focus on environmental standards, safety, and technological efficiency. The venture is also expected to stimulate local employment and aid in regional development.
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.