Oil Prices Decline Despite US Pressure on India

SadaNews - Oil prices have declined as traders ignored US attempts to urge India to halt its imports of Russian crude, while market watchers warned of a potential surplus in global supply in the coming months.

Brent crude fell below $68 a barrel, while West Texas Intermediate approached $64. This comes after White House trade advisor Peter Navarro intensified his rhetoric against New Delhi, calling on it to stop its oil purchases from Russia, coinciding with Washington's increase of tariffs on Russian imports to 50%. Navarro went as far as to describe Indians as "arrogant," labeling the war in Ukraine as "Modi's War," in reference to Prime Minister Narendra Modi.

While China is also a major buyer of Russian oil, the White House directed its criticisms primarily at India. In contrast, several Indian refineries have insisted on continuing to rely on Russian crude for October loadings and beyond.

Surplus Supply Pressure

Oil prices have seen fluctuations this week, on track to record their largest monthly losses since April. Traders fear that the global market may face a surplus in supply in the coming quarters after the "OPEC+" alliance eased production restrictions, while non-aligned countries increased their supply output.

Warren Patterson, head of commodity strategy at "ING," said: "The expected surplus keeps the market outlook clearly negative." However, he warned that "the greatest upward risk remains the potential for more stringent US sanctions on Russia, and possibly broader secondary tariffs."

Pessimistic Estimates from "Citi"

In a recent note, analysts at "Citi Group" stated that Brent crude will trade at an average of $66 a barrel in the current quarter, dropping to $63 in the last quarter of the year when "the impact of the surplus starts to exert more pressure," according to the note shared by Anthony Yuan.

Despite the "Brent" spot curve remaining in contango – a positive indicator – the difference between the two nearest contracts has dropped to just 57 cents, from 72 cents a month ago.

Mixed US Data

In the United States, a government report released on Wednesday painted a mixed picture of the local market. The operating rates at refineries across all regions fell, bringing the national average down to its lowest level since early July, while crude inventories at the "Cushing" hub in Oklahoma fell for the first time in eight weeks.