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Trade war, Saudi quest to protect market share have oil prices spiralling; India not complaining

2 min read

Global Trade War and Oil Market Dynamics

The intensifying trade war between the United States and China has significantly impacted global markets, with fears of a recession affecting various sectors, including crude oil.

Impact on Oil Prices

  • The trade war has led to a slump in raw material demand, affecting commodity markets like crude oil.
  • Saudi Arabia's unexpected decision to increase oil production, coupled with the tariff war, caused oil prices to plummet to a four-year low.
  • The benchmark Brent crude slipped below $60 per barrel, while West Texas Intermediate (WTI) fell even further.
  • Goldman Sachs adjusted its forecast for Brent crude, predicting it to be $58 per barrel in 2026.

Implications for India

India, as the third-largest global oil consumer, benefits from lower oil prices but remains vulnerable due to high import dependency.

  • India's crude oil import bill for the first 11 months of 2024-25 was nearly $220 billion.
  • Oil imports constitute over a third of India's total merchandise import bill.

Strategic Moves by Saudi Arabia and OPEC+

  • Saudi Arabia's increased production aims to gain market share and enforce OPEC+ discipline.
  • The move threatens American shale oil producers, who require higher prices to sustain production.
  • Saudi Arabia previously flooded the market to challenge US shale producers.

Future Outlook and Considerations

  • The direction of the trade war will heavily influence global oil sentiment.
  • A positive resolution could bolster oil prices, while a prolonged conflict might maintain a bearish outlook.
  • Saudi Arabia and OPEC+ face challenges in managing global supply without weakening internal cohesion.

Sukalp Sharma, a seasoned journalist with expertise in energy and aviation, provides these insights.

  • Tags :
  • Trade war
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