Oil & Gas Sector Update : Crude Compass - Weekly Oil Market Dossier by Choice Broking Ltd
We maintain our estimate for Brent at US$69.0/b for the Calendar Year 2025 (as published on June 13, 2025) compared to YTD average of US$69.8/b.
As we enter into the period of seasonal downturn, the oil prices still are being supported by (a) expectation of tighter sanctions against the Russian barrels and (b) relentless buying from China. Moreover, at the current price levels, the market has already baked in the increase in supply from OPEC+ which could be an outcome of the meeting on Sunday (Oct 5, 2025). We continue to highlight the potential catalysts for Brent price as shown in Exhibit 1. In the current scenario, we could see following aspects driving the market:
i. As G7 intensifies pressure to increase sanctions against buying Russian oil, we see the discount of Urals to Brent widening. At present, this is the cheapest crude for India as indicated from commentary by the Petroleum Minister. In our opinion, further discount may propel the GRMs higher. India’s refined products are not subject to tariffs in the US till date.
ii. As northern winter sets in, it might get difficult for NATO members to suspend buying Russian Energy, as some rely on oil but European nations have not been able to be entirely independent of Russian gas.
iii. If it is assumed, India is compelled to stop buying Russian crude, it might seek exemption guarantees to import from Iran or Venezuela. Moreover, supply chains have been established by India to diversify crude source, thereby ensuring security. However, we do see increase in import bill, leading to possibility of currency depreciation.
In our opinion, sanctions’ delay coupled with widening discount may become a tailwind for refiners. To add to the optimism, the Petroleum Minister addressed the investor community last week, reassuring non-intervention in PSUs’ businesses.
Exhibit 1: Catalysts for Brent
Exhibit 2: Brent estimates
Exhibit 3: Average Indian Crude Basket (US$/bbl) against Average Brent Prices (US$/bbl)
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