India’s Oil Market Outlook

• The global oil market is a cyclical battle between the Organization of the Petroleum Exporting Countries (OPEC)-Plus and remaining oil exporters, with consumers playing a crucial role.

• Crude, the world’s most valued commodity, is a vital input for transport, petrochemicals, and a financial lubricant.

• Technological disruptions such as shale, horizontal drilling, and ultra-deep continental shelf drilling have enhanced production.

• Global crude demand is expected to grow by 1.3 mbpd or 1.2% in 2025, with only a tenth of that coming from the 38 countries of the Organisation for Economic Co-operation and Development (OECD).

• Production of crude has surged by 5.6 mbpd last month over last year, with 3.1 mbpd coming from the OPEC+ and the rest mainly from higher production from the U.S., Canada, Brazil, Guyana, and Argentina.

• Brent oil prices have declined by 16% since the beginning of the year, with nearly half of that fall coming over the last month.

• Global events such as the China-U.S. tariff war and concerning Ukrainian drone attacks on Russian hydrocarbon infrastructure have disrupted the decline.

• The looming supply glut has affected the dynamics of the OPEC+ group of producers, with Saudi Arabia wanting to quickly unwind the remaining production cuts to regain its market share.

• The International Monetary Fund’s World Economic Outlook predicts a marginal slowdown of the global economic growth rates to 3.2% in 2025 and 3.1% in 2026, with risks to the downside.

• The simultaneous decline in both oil price and the U.S. dollar it is priced in is likely to have a net positive impact on India.

• The oil glut may reduce reliance on discounted Russian crude, removing the underlying cause for the tariff frictions with the U.S.

• However, the remittances, exports, and investments may stagnate as the West Asian economies attenuate.

Oil market outlook is important topic for Civil service exam (WBCS).

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