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Informist, Tuesday, Jul. 1, 2025

 

--S&P Global Das: See crude oil prices around $50-$60/bbl by end of 2025

--CONTEXT: S&P Global oil mkts executive director Das' comments in interview
--S&P Global Das: See oil inventories up in non-OECD countries like China

--S&P Global Das: Current oil market an "era of surplus"

--S&P Global Das: See India's oil imports rising, need to diversify sources

 

By Ashutosh Pati, J. Navya Sruthi, and Abhijit Doshi

 

MUMBAI – With expectations of oversupply in the oil market and slow growth in demand, crude oil prices are likely to fall to around $50-$60 per barrel by the end of 2025, said Premasish Das, executive director for oil markets research and analysis at S&P Global Commodity Insights. "If we purely go with supply-demand fundamentals by leaving ongoing geopolitical tensions, crude oil prices could be as low as $50 per barrel or below by end of the year," Das told Informist in an interaction on Monday.

 

After tensions between Iran and Israel flared up in June, crude oil prices rose around $10-$12 per barrel. But Das believes the impact of the conflict on oil prices wasn't as much as feared. "Historically, we have always been worried about when Iran and Israel will have military exchange," he said, adding that in such a situation, prices could have risen by $30, $40, or $50 a barrel. But that wasn't the case because of expectations of oversupply, he said, terming this an "era of surplus".

 

Despite a fall in crude oil stocks in the US, Das sees inventories building up in non-Organization for Economic Cooperation and Development countries such as China. "Now, if Chinese economy slows down, there could be a potential that Chinese imports will be lower, and then inventory level in other parts of the world can start building up as well," he said.

 

While a fall in US inventories would support prices, the increase in supply would be quite significant and would offset the fall. Assuming that the Organization of the Petroleum Exporting Countries and its allies continue with supply hikes, inventories would come back, Das said. "If they do (increase production), actually, that means we are talking of almost additional 2.5 million barrels of oil to the market just from OPEC+," he said.

 

"I think (in) second half, we need to see the outcome of all these trade deals and how (US President) Mr. Trump is going to react to that. I think those are the key parameters." However, there is a possibility of OPEC and its allies saying they won't increase supply anymore, which would support prices, he said.

 

OPEC HIKES

A few months ago, Donald Trump had asked OPEC and its allies to increase production and lower oil prices, though the cartel wanted to hike supply even before that. "I can't say that it (supply hike by OPEC and its allies) is just because of Mr. Trump. I think there might be a general pressure from within the OPEC+ group to increase their production because a lot of new projects have been announced...think about UAE, Kazakhstan, ExxonMobil, Chevron," Das said.

 

Countries have spent billions of dollars to build projects and if they cannot export, it would be a big challenge for them, Das said. "So, there is pressure building on those governments, so they are asking...export more, and that is the real drive for this," Das said.

 

While Trump could be a factor behind the cartel's decision to increase production, even he would not be happy with extremely low crude oil prices, as it would not support production in the US, Das said. "Mr. Trump might be happy now. Will he be happy next year? I don't know. If the US production drops, is that what he would like? I don't know."

 

On the ceasefire in place between Israel and Iran, Das said, "...we don't know how the outcome would be, whether they will continue to abide by...because if you think about Iran and Israel, they have been fighting for maybe 40 plus years right now. So, it's not going to go away within a week," he said. With the risk premium added to fundamentals, crude oil prices are unlikely to fall below $50 per barrel, he said.

 

However, such low prices "may or may not be a reality for long", Das said. Eventually, OPEC and its allies will pull back their supply hikes as that would put several countries under severe financial pressure, he said. "Or it could be Mr. Trump thinking, 'I need a particular price through which the US production will be also supported.'"

 

OIL IMPORTS

Das said India is set to lead the growth in global oil demand. However, as the country's import dependency has increased, there's a need to diversify sourcing. There would be a cost when it comes to diversification of sources, Das conceded. "India has started doing the strategic reserve, right? That is a very expensive affair, it's not cheap, but the government decided to do that, (and) not having that is a much bigger challenge than having it," he said.

 

The Indian government is quite proactive and has been trying to develop relations with the governments of various countries, Das said. "Middle East (West Asia) is very important...we cannot think of any strategy without Middle East, given our refining infrastructure, given the proximity of the region."

 

At 1412 IST, the most-active September Brent crude oil contract on Intercontinental Exchange was up 0.2% from the previous close at $66.89 per barrel.  End

 

US$1 = INR 85.52

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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