Geopolitical Tensions and Policy Shifts Pose Threats to Global Oil Demand

A recent report by S&P Global warns that geopolitical tensions and evolving trade policies could adversely affect global oil demand. Premasish Das, Executive Director for Oil Markets Research, noted that these factors, particularly U.S. tariffs, are decelerating global growth and possibly dampening oil consumption. Notably, refined fuel consumption in the U.S. and China is expected to decline.

Conversely, India is anticipated to spearhead global oil demand growth, making the diversification of crude imports strategically critical. Meanwhile, OPEC+ increased oil production by 411,000 barrels per day, leading to a 20% drop in Brent crude prices. A temporary spike in prices above $80 per barrel followed a brief conflict between Iran and Israel.

Looking ahead, the average oil price for 2025 has been revised to $68 per barrel, with expectations of it falling below $60 by year-end due to rising supply. India's strategic trade influence is burgeoning, as highlighted by Rahul Kapoor, Global Head of Shipping Research, who noted India's decreased reliance on the Strait of Hormuz due to increased Russian crude imports.

Keen on the energy transition, India is targeting 500 GW of renewable energy capacity by 2030, though S&P forecasts reaching this milestone by 2032. Despite obstacles like infrastructure and regulatory issues, robust governmental and private sector backing are propelling advancements.

Furthermore, Jenny Yang, Head of Power and Renewables Research, foresees an 80% surge in global power demand by 2050. In India, non-fossil fuels could constitute 77% of power capacity. India's significant policy support, investments, and international alliances position it as a pivotal player in global energy and trade in the coming decades.