Trading Signals & Macro Trends

India’s oil playbook: Navigating geopolitics, prices and supply shifts

India’s crude oil import strategy has undergone significant shifts in recent years, influenced by growing demand, crude price fluctuations, geopolitical upheavals and energy security needs. A robust refining system has made India largely self-sufficient in fuel production, reducing reliance on expensive imports of refined products, driving economic growth, and supporting its transportation and petrochemical industries. The country is also a key player in global energy trade, exporting around 1.2 million barrels per day (bpd) of refined products — about 7% of global product exports — including gasoline, gasoil, jet fuel, and naphtha. Since about 42% of the domestic demand and 60% of export demand is middle distillates-driven, India relies heavily on medium-sour crudes like Urals and Middle Eastern grades. India plans to expand its refining capacity by about 20% by 2028, reaching 6.3 million bpd, ensuring both domestic supply and exports growth. Therefore, it remains crucial that India has affordable and reliable sources of crude oil.

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China update: Heavy crudes from Venezuela and Canada in focus

Key takeaways:

• With Trump to revoke Chevron’s Venezuela oil license, new sanctions on Venezuela appear on the way, which could mean higher imports and at the same time, higher logistical risk and cost for buyers in the Chinese independent refinery sector.

• Canadian AWB scares away other Asian refiners because of its high TAN, leaving a few mega Chinese refineries as the only steady buyers.

• Petcoke production is squeezed as the main producers, Shandong teapots, are reducing runs because of the new sanctions. The rallying petcoke price is adding cost to the battery supply chain as petcoke is anode material.

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WTI exports to Europe to rise as netbacks improve against Asia

Exports of West Texas Intermediate (WTI) crude from the US to Europe are poised to rise as netbacks for the key crude grade from Europe improve against netbacks from Asia, Rystad Energy analysis shows, with the March and April margin outlook suggesting a higher netback value difference. The flow of WTI crude to both Asia and Europe has been on the rise since the outbreak of war between Russia and Ukraine in early 2022, with light sweet crude dominating the refinery basket in both regions.

Rystad Energy’s Oil Trading Solution provides weekly assessments of refinery variable cost margins in Europe, Asia and the US. This data acts as a predictive tool to indicate flows of competing grades in the global energy market. West Texas intermediate (WTI) crude is a key US grade that is exported from the US Gulf Coast to Europe and Asia. Its trade flow can swing from clearing primarily in Europe to clearing in Asia based on its market value in each market and the resulting netback price.

Exports of light sweet WTI began in early 2016 after US Congress lifted its domestic crude oil export ban in December the previous year. The first shipment was exported from the port of Corpus Christi in Texas to South Korea. Since then, Europe and Asia have been the main destinations of the light sweet grade. Currently WTI production averages more than 4.4 million barrels per day (bpd), with around 3 million bpd exported mainly to Europe (52%), Asia (30%) and Canada (9%). In Europe, the Netherlands (14%), UK (8%), Spain (7%), France (7%), Italy (4%), Germany (2%), and Denmark (2%) are the major importers, whereas in Asia, the main importing countries are South Korea (9%), Singapore (8%), Taiwan (China) (7%), India (5%) and mainland China (3%).

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Tariff countdown is over: Brace for volatility, watch for inflation

The global trade environment has entered a new phase of escalation, with the US pressing ahead with tariffs on mainland China, the European Union, and again on Canada, and Mexico. Over the past week, President Donald Trump confirmed an additional 10% tariff on all Chinese imports, doubling the previous levy imposed earlier this month, while reaffirming a 25% duty on European, Canadian, and Mexican exports. After initially delaying the North American measures, the White House now insists they will take effect on 4 March. The latest moves have triggered immediate pushback from key trading partners, with China vowing countermeasures, Mexico considering its own duties on Chinese goods, and the EU threatening strong retaliation. Canada, meanwhile, has pledged to match US tariffs dollar for dollar, raising the stakes for a broader North American trade dispute. Market reaction has been swift: both the yuan and the euro weakened, as expected. Yet interestingly, US equity markets have remained in positive territory right after the announcement, and gold, which is seen as a hedge against inflation, declined, in a sign that investors may have already priced in the initial impact (or lack thereof) of Trump’s tariffs on inflation and companies’ earnings. It is also important to note that logistical bottlenecks within the Trump administration could slow the tariff implementation in the weeks ahead.

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Agency comparison: No big shift in 2025 projections after Trump's first steps

The latest round of oil market reports, including from the US Energy Information Administration (EIA),  the International Energy Agency (IEA) and OPEC, and our updated Oil Market Balances Report (OMB) forecasts for February 2025, show no big shifts in projections for this year. Under the current OPEC+ policy, markets will face a surplus balance in 3Q25, with a significant disbalance for 4Q25 if OPEC+ implements the unwinding of production cuts (excluding OPEC view). In this analysis, we compare the agencies’ projections for 2025, providing key insights into the changing landscape of oil supply and demand.

Key takeaways from this month’s reports include:

• Demand growth revisions: There is somewhat of a consensus on demand growth forecasts for 2025, with the growth rates at between +1.1 million barrels per day (bpd) (IEA) and +1.45 million bpd (OPEC). OPEC has maintained its 2025 demand growth forecast at 1.45 million bpd, consistent with the 25 January estimate, with close to 60% of this demand coming from Asia alone. Demand for China has been revised down by 65,000 bpd for both 2025 and 2026. OPEC also revised upwards its European demand by 50,000 bpd on the back of higher year end demand. The IEA dropped its 4Q24 growth estimate by 213,000 bpd and increased its demand growth forecasts by 40,000 bpd to 1.1 million bpd for this year as lower fuel prices and cold winter in the northern hemisphere stimulated demand and a renewed ethane production boom in the US provided inputs for petrochemical production.

• All agencies, except for OPEC, suggest limited/no room for OPEC+ to increase production. While a crude deficit was observed in 2H24, the emerging product surplus will restrict room for further output. Based on Rystad Energy analysis, the supply-demand balance will be even more sensitive to any OPEC+ production increases, potentially leading to further OPEC+ rethinking of its strategy to put an additional 1.8 million bpd in the market by the end of this year.

• All agencies, except for OPEC, project that liquids supply will surpass demand next year if OPEC+ increases production. The glut is expected to be most significant in 4Q25, reaching 1.1 million bpd for the EIA and 1.7 million bpd for Rystad Energy.

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