Oil Prices Rise Amid Economic Hopes and Shifting Supply Dynamics

Key Highlights

• Oil Price Trends: Brent crude reached $76.15/barrel, and WTI stood at $73.38/barrel, their highest since October. 
• Demand and Policy: Interest rate cuts and China’s growth-focused policies are expected to enhance fuel demand in 2025.
• India’s Import Shifts: Russian crude’s share in India’s imports fell to 31%, with Angola replacing the US in the top five suppliers. 
• Expert Analysis: Optimism around China’s proactive policies and a potential cold snap in the US and Europe may boost demand for oil and diesel.

Global Oil Prices Surge to Two-Month High

• Oil prices extended gains on Friday after closing at their highest in more than two months in the prior session, amid hopes that governments worldwide may increase policy support to revive economic growth that would lift fuel demand.
• Brent crude futures rose 22 cents, or 0.3 percent, to $76.15 a barrel by 7:20 a.m. Saudi time, after settling at its highest since Thursday, Oct. 25. 
• US West Texas Intermediate crude was up 25 cents, or 0.3 percent, at $73.38 a barrel, with Thursday’s close its highest since Oct. 14. MCX Crude oil prices opened at 6281 with a fall of 0.29%.

Petroleum Demand and Supply: Policy Shifts and Demand Expectations for 2025

• Factory activity in Asia, Europe, and the US ended 2024 on a soft note as expectations for the New Year soured due to growing trade risks from Donald Trump’s impending return to the US presidency and China’s fragile economic recovery.
• Lower interest rates should spur more economic growth that would lead to higher fuel consumption.
• Investors are eyeing further interest rate cuts by the Federal Reserve this year to support the US economy, while China’s President Xi Jinping has pledged more proactive policies to promote growth.

Petroleum News: India’s Changing Crude Oil Import Patterns

• The United States no longer remains one of the top five crude oil suppliers to India as African nation Angola nudged ahead of the US in December.
• Russia continues to be the top supplier of oil to India even though India’s dependence on Russian oil has fallen.
• According to energy cargo tracking firm Vortexa, Russian crude made up 31% of India’s imports, the lowest share of the year, while the US accounted for just 1%.
• This marks the second consecutive month of declining Russian imports, driven by reduced discounts. Meanwhile, the US dropped out of India’s top five crude suppliers, with Angola moving into the fifth position. Not long ago (in August 2024), the US accounted for 8% of India’s crude oil imports.
• India significantly increased imports from Iraq in December, which rose to 23% from 16% in November, while imports from Saudi Arabia and the UAE were 13% and 10%, respectively. 
• In contrast, Russian crude imports fell from 36% in November to 31% in December. At one point in time, India imported as much as 44% of its supplies from Russia.
• The surge in Russian crude imports by Indian refiners began after the Russia-Ukraine war, when Russian oil was offered at significant discounts.

Expert Opinion: China’s Growth Policies and Winter Weather Impacts

• The rise in oil prices was fueled by optimism regarding China's economic growth prospects. In his New Year address on Tuesday, Xi Jinping stated that China would implement more proactive policies to promote growth in 2025. 
• Traders are paying close attention to recent weather forecasts as expectations of a cold snap in the US and Europe over the coming weeks could boost demand for diesel as a substitute for natural gas for heating.