Minister for Petroleum and Natural Gas, Hardeep Singh Puri, said on Tuesday that he expects international crude oil prices to come down, considering there is no shortage of the critical resource.
Crude oil prices on the benchmark Brent hovered at $74.40 a barrel on Tuesday afternoon as traders shed concerns over the attack by Israel on Iranian oil facilities and focused on weakening global demand.
“I think it should come down. It depends on global factors. One thing that is very clear is there is no shortage of oil in the world. Today, more and more oil is coming into the market,” Puri told reporters on the sidelines of an event.
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The Minister emphasized that countries such as Brazil and Guyana are bringing more crude to the market.
Asked about the impact of more supplies, he explained “Now, there are other factors like geopolitical tensions. There is no shortage. But if there is tension in one part of the world and if you have to take a longer route, then the cost of freight, insurance, etc., will go up. There is more than enough oil in the world, and prices should hopefully come down. That is my personal expectation.”
Puri reiterated that the government was able to navigate the energy crisis in the past, and will successfully navigate it in the future.
Faltering global demand
JM Financial, in a commentary on Monday, said that the Brent has moderated to around $73 per barrel after reports that Israel may not strike Iran’s oil assets.
“We believe with the US elections on November 5, 2024, the US may not prefer any major spike in oil prices ahead of elections on account of any near-term disruption in Iranian oil supply. Further, oil prices are under pressure driven by oil-demand-growth concerns in China,” it added.
Besides, adding to concerns is the potential over-supply due to OPEC+’s plans to phase out 2.2 million barrels per day (mb/d) of voluntary output cuts over December 2024 to November 2025 (had deferred the output hike by two months from its earlier plans to phase out cuts from October 2024 to September 2025), it added.
The brokerage also pointed out that the Russian crude discount to India reduced mom to around $1.8 per barrel in August 2024 (much lower than $6-10 per barrel in H1 CY 2023),
“As per CMIE, the discount on Russian crude to India declined mom to around $1.8 per barrel in August 2024 vs. $2.9 in July 2024 (much lower than $6-10 a barrel in H1 CY 2023). Further, Russia’s robust share of India’s crude imports also declined mom to around 35 per cent in August 2024 vs. 45 per cent in July 2024 (vs. around 20 per cent in December 2022 and 1-2 per cent pre-Ukraine invasion),” it added.
