With the geopolitical scenario changing, crude oil prices could go up again. Brent crude oil price is already up by about 10 per cent since the first week of June to around $85 per barrel currently.
Going forward, Joel Hanley, global director, crude and fuel oil markets, S&P Global Commodity Insight, told Business Standard, “Our analysts project the (Brent crude) prices to move in the range of $85 to $100 in coming months,” following continuing geopolitical interferences.
However, OPEC countries have enough oil which can potentially cap any sharp price increases. Hanley said that OPEC countries may supply more oil and can act as a cap on prices.
Currently, Russian oil is the preferred option in India due to the competitive prices offered by Russia. Five years ago, Russia accounted for only 5 per cent of India’s total crude oil imports, but this figure has now risen to 41 per cent. Following the imposition of sanctions by Western countries on Russia after the start of its war with Ukraine, Russia has offered to supply crude oil to India at a reduced price.
OPEC remains reliant on crude oil. In the future, if OPEC begins supplying oil at a lower price and India’s cost of importing oil from OPEC falls below the cost of importing from Russia, India’s demand will shift towards OPEC. This could create pressure on Russia to match that price.
Hanley said that India is now on the global map of the crude oil market. India has been a big importer but, “Now (also) a key supplier of refined products to Europe and beyond, as well as furnishing its own growing population, India’s building of large refineries has helped put it on the energy map.”
“As of now, India has received a huge boost from trade with Russia at a discount. Sweet/sour crude spreads have been turned upside down by the actions of OPEC+ and increased production from the West. India now sits very well positioned to take advantage of these changes to increase its levels of security and affordability,” Hanley stated.
Earlier addressing a media round table, Pritish Raj, managing pricing editor, Asia thermal coal, S&P Global Commodity Insights, told the media that, “For a price-sensitive market like India, coal imports will also not be uncompetitive as going forward we see an oversupplied global market from both the Pacific and Atlantic basins, which will have a bearing on the seaborne prices, thus making it feasible for many Asian countries.”
India’s coal demand is expected to be 1.5 billion tonnes by 2030, which can be easily met by imports. But Raj said, “Domestic coal quality is a challenge and transportation hurdles still stay strong.” He expects India’s domestic production to easily be in the range of 1.5-1.7 billion tonnes by 2030, and imports to stay stable at over 150 million tonnes over the next 5-6 years.
However, if domestic coal quality improves and transportation hurdles also reduce, imports by India’s power sector falling to 100 million tonnes is not ruled out.
Raj sees thermal coal prices moving in a narrow range in the near future. Indonesia’s benchmark 4200 kcal price is around $66 and 5000 kcal around $76 a tonne.
First Published: Jun 25 2024 | 5:36 PM IST
