Crude prices may remain higher at $85-100 in short term: S&P Global

This report has been updated

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 now.

Joel Hanley, global director, crude & 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-$100 in the coming months.”

This follows the continuing geopolitical interference.

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 choice in India due to their competitive prices. 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 Ukraine war, Russia has offered to supply crude oil to India at a reduced price.

OPEC remains reliant on crude oil. In future, if OPEC begins supplying oil at a lower price and India's cost of importing oil from OPEC falls below that from Russia, India's demand will shift towards OPEC. This could create pressure on Russia to match that price.

He said India is now on the global map of the crude oil market. India has been a big importer.

“Now, it is a key supplier of refined products to Europe and beyond. It also furnishes its own growing population. India's building of large refineries has helped put it on the energy map,” said Hanley.

“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 added.

Earlier, addressing a media roundtable, Pritish Raj, managing pricing editor, Asia Thermal Cool, 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.”

India’s coal demand is expected to be 1.5 billion tonnes by 2030.

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. He added, “And, imports will 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 may fall to 100 million tonnes, he said.

Raj sees thermal coal prices moving in a narrow range in the near future. Indonesia’s benchmark 4200 kcal last six months average price is around $56 a tonne  and 5000 kcal around $76.