Crude oil prices may rise again if the geopolitical situation changes. Brent crude oil prices have already risen by around 10% since the first week of June, reaching around $85 per barrel.
Russian oil is the preferred choice in India due to its affordable pricing. Five years ago, Russia contributed 5% of India’s total crude oil imports. However, this proportion has already grown to 41%. Following the implementation of sanctions by Western countries on Russia following the Ukraine conflict, Russia has offered to deliver crude oil to India at a lower price.
OPEC still relies on crude oil. In the future, if OPEC begins to produce oil at a lower price and India’s cost of importing oil from OPEC falls below that of Russia, India’s demand will move to OPEC. This could put pressure on Russia to match the price.
India has made its imprint on the global crude oil market. India has been a major importer. Now, it is a major supplier of refined products to Europe and beyond. It also provides for its developing population. India’s construction of big refineries has helped to position it on the energy map.
India has benefited greatly from low-cost trading with Russia. OPEC+’s measures, combined with increased output from the West, have turned sweet/sour crude spreads upside down. India is presently in a very good position to take advantage of these improvements and increase its security and affordability.
Coal imports will not be uncompetitive in a price-sensitive market like India, since we anticipate an oversupplied global market from both the Pacific and Atlantic basins. If domestic coal quality improves and transportation barriers are reduced, India’s power sector’s imports might drop to 100 million tons.