Taking Russian oil out of the global market would turn the price dynamic ‘upside down’, says S&P Global Commodity Insights co-president Dave Ernsberger. Geopolitical factors are expected to continue influencing oil markets in the coming year, with a complex relationship between policies and prices, according to Ernsberger.“There’s a lot of production available that could come to the market from OPEC and OPEC plus but if it came to the market in full volume, it would be too much,” he told ET in an interview.
Where are oil prices headed?
“We currently forecast from S&P Global Commodity Insights that the price will be closer to $60 a barrel by the end of next year. And perhaps as low as $55 a barrel.” He noted that the risk to this forecast tends towards the higher side.As the world’s third-largest oil supplier, Russia’s position is significant. Ernsberger explained that any substantial effort to remove Russian oil from the market through policy or sanctions could fundamentally alter the current market dynamics.Also Read | ‘Curb Russia oil imports’: US tells India – Crude buy key factor in reducing tariffs, sealing trade dealThe global oil supply situation presents a complex strategic scenario, with numerous participants simultaneously attempting to influence the market’s direction, whilst operating within the same constraints.A reduction in Russian oil purchases by India could potentially remove Russian supply from the market, creating opportunities for additional output from OPEC and OPEC Plus nations.He further noted that the United States maintains its interest in continuing oil supply operations.
US tariff impact: What no one predicted!
According to Ernsberger, when a major global economy like the US implements high tariffs, it creates economic motivation for nations, including India, to prioritise self-sufficiency over international dependency, despite potentially higher costs.From an economic standpoint, the world economy is transitioning into a period where investment decisions are no longer primarily driven by cost and value considerations, which he noted as the most significant result of implementing tariffs.Contrary to traditional expectations, the unprecedented tariff levels have neither dampened the US economy nor significantly impacted global economic conditions, which he pointed out as surprising.Another revelation is the reduced dependency of China on the United States than previously assumed.Since the February tariff announcement, global supply chains have shown unexpected resilience. He identified two key factors: the fluctuating nature of tariffs hampering medium-term planning, and the complexity in determining precise product origins.Also Read | Trump’s H-1B visa fee hike impact: Germany, UK, Canada roll out red carpet for India’s tech talent; pitch ‘predictable’ rules
About the Author
