Oil Prices Fall as Geopolitical Tensions, Supply Concerns Mount
NEW YORK/NEW DELHI - Global oil prices have declined by approximately 10% since the start of the year, driven by increased supply from OPEC+ nations and growing anxieties surrounding a potential U.S.-led global trade war that could dampen energy demand. This downturn coincides with escalating geopolitical pressures, particularly surrounding India’s continued imports of Russian oil and upcoming discussions between Indian Prime Minister Narendra Modi and Russian President Vladimir Putin.
The price slide comes as the U.S. reportedly considers tightening secondary sanctions to curb India’s purchases of Russian crude,a move New Delhi has labeled “unfair,unjustified and illogical.” The situation highlights a complex interplay between energy markets, international diplomacy, and the ongoing conflict in Ukraine. The developments impact global energy consumers, producers, and the broader economic outlook, with potential ramifications for inflation and economic growth.
India has defended its relationship with Moscow, even as some local manufacturers have begun exploring alternative sources, including U.S. shipments. The OPEC+ coalition, which includes Russia, is scheduled to convene virtually on September 7th to intentional on future production levels. The International Energy Agency anticipates a balanced oil market next year.
“The focus is now on the next meeting of the OPEC+ alliance, as the possibility of returning the 1.65 million barrels per day will be discussed from the remaining voluntary discounts in production,” stated Gao Mingo, SDIC Essence Futures. “After the peak season ends, the pressure of the surplus shown in the oil market will become more clear.”
Meanwhile, in the United States, refiners have reduced their purchasing centers for American crude to an 18-year low, citing economic policy uncertainty and supply concerns.
The U.S. pressure on India is part of a broader effort to curtail funding for the war in Ukraine, though Washington has not yet imposed similar measures on China. White House commercial advisor Peter Navarro recently asserted that New Delhi is “nourishing the Russian war machine” and acting as a “laundry of money laundering for the Kremlin” in a Fox News Sunday interview.
Gao Mingo added, ”If additional geopolitical disturbances do not occur, the price pressure on prices will increase.”
