Crude Oil Prices Edge Higher; India Sticks to Russian Discounts

Key Highlights

1. Price Trends: Brent oil futures rose to $73.46 (+0.22%), while WTI futures climbed to $69.31 (+0.20%). MCX November crude oil futures increased to ₹5,845 (+0.45%), and December futures rose to ₹5,868 (+0.55%)
2. Demand and Supply: India continues importing 38–40% of its crude oil from Russia due to favorable price discounts of $12–$12.30 per barrel below Brent. With 85% of its crude oil imported, India focuses on sourcing affordable oil to meet growing demand.
3. Market Disruptions: Production halted at Norway's Johan Sverdrup oilfield due to a power outage. Kazakhstan’s Tengiz oilfield saw a 28–30% production reduction due to repairs.
4. Market Outlook: Despite surpluses projected until 2025, the extent depends on OPEC+ decisions at the December 1 meeting.

Petroleum Price: Global Petroleum Prices See Marginal Gains

• January Brent oil futures were trading at $73.46, up 0.22%, while January crude oil futures on WTI (West Texas Intermediate) were at $69.31, up 0.20%.
• On the Multi Commodity Exchange (MCX), November crude oil futures were trading at ₹5,845 during the initial hour on Tuesday, up 0.45% from the previous close of ₹5,819. December futures were trading at ₹5,868, up 0.55% from the previous close of ₹5,836.

Petroleum demand and supply: Major Oilfield Disruptions Impact Supply Chains

• India is unlikely to reduce its crude oil imports from Russia due to the favorable price arbitrage. Russia currently accounts for approximately 38–40% of India’s crude oil imports.
• As India imports 85% of its crude oil requirements, the country has committed to sourcing oil from the cheapest available sources to meet its growing demand, with Russian oil remaining a preferred option due to significant discounts, according to S&P Global Commodity Insights.
• Abhishek Ranjan, South Asia oil research lead at S&P Global, noted that India is unlikely to shift away from Russian oil unless the US offers prices lower than Russia’s discounted rates.
• Russian Urals crude was discounted to Dated Brent by an average of $12.12–$12.30 per barrel from August to October, according to Platts.

Petroleum News: OPEC+ Decisions to Shape Future Oil Markets

• Norway’s Equinor halted production at the Johan Sverdrup oilfield due to an onshore power outage. Efforts are underway to resume production, but no timeline has been disclosed.
• Repair works at Kazakhstan’s Tengiz oilfield reduced production by 28–30%. Repairs are expected to finish by Saturday.
• Warren Patterson and Ewa Manthey of ING Think noted that oil prices rose on Monday, with ICE Brent gaining 3.2%, supported by a weaker US dollar, production halts in Norway and Kazakhstan, and geopolitical risks from Russia-Ukraine tensions.
• The market is projected to remain in surplus through 2025, though the extent depends on OPEC+ output policy, to be decided at their December 1 meeting.

Expert Opinion: Geopolitical and Market Volatility

• The conflict in Eastern Europe is expected to escalate following the US government's decision to allow Ukraine to carry out long-range strikes on Russia, adding further volatility to global oil markets.
• Norway's Johan Sverdrup oilfield halt also adds significant pressure, given that Norway is Europe’s largest fossil fuel producer outside of Russia.