New Delhi: OPEC+ will raise crude oil production by 547,000 barrels per day from September, completing the reversal of its nearly two-year effort to unwind 2.2 million bpd of cuts, even as India’s medium-quality crude demand is projected to grow by another 1 million bpd by 2030, sustaining its reliance on Russian supplies, according to Rystad Energy.
Brent crude futures stayed in the $68–69 per barrel range on Monday, with bearish sentiment after the OPEC+ supply announcement and ahead of possible US measures targeting Russian oil buyers from August 8. Most of Russia’s barrels are going to China and India.
The Indian government has pushed back against US and EU criticism of its imports as “unjustified and unreasonable,” pointing out that China and the EU import more Russian energy than India.
“Whatever metric or dashboard you look at, the market currently lacks clear direction, with uncertainty lingering as the US prepares potential measures against Russia and buyers of Russian oil,” said Mariano Alonso, Vice President, Commodity Markets Analysis – Oil at Rystad Energy. He said India and China are likely to maintain purchase patterns, while OPEC’s production hike offers a near-term buffer for global prices.
India’s oil demand has grown by about 1 million bpd over the last decade despite the pandemic and is projected to rise by 0.8–0.9 million bpd more by 2030. Refining capacity, now near 5.5 million bpd, is expected to cross 6 million bpd in 2029. Domestic crude output has been declining and is expected to fall below 0.5 million bpd by 2030, keeping imports at 5.0–5.8 million bpd.
Imports require roughly 60% medium-quality crude, 30% light and 10% heavy. Russian barrels fit the medium sour category, where demand is set to grow by another 1 million bpd by 2030. Gains in Russian imports have been offset by lower availability from other countries due to sanctions, OPEC+ cuts and diversion to Europe.
“In a hypothetical scenario where US production included medium sour barrels, India would likely have purchased more from the US instead of Russia,” Rystad noted, adding that US exports are mainly light sweet crude, which India produces domestically and currently has limited need for.
So far, India, China and Turkey have been buying Russian oil under the EU’s price cap without violating sanctions. Reports of stricter US action targeting India—but not China—have raised questions about the effectiveness of such measures.
If enforced, these measures could push more Russian barrels to China, while India could turn to Middle East OPEC+ members for supply. Rystad said a bearish price scenario could develop if tariffs reduce demand, OPEC+ raises supply, a Russian ceasefire occurs, and refinery maintenance peaks, similar to late 2018. It said the probability is low for now, with OPEC+ in a position to take corrective action.
