New Delhi [India], March 21 : Despite new US sanctions imposed in January, Russian oil exports have remained largely unaffected and continued almost as normal, according to HSBC Global Research.
"Russian exports have continued almost as normal despite new US sanctions announced in January," says the report.
Supply disruptions are the main upside risk to crude prices, as so far most sanctions-related newsflow has largely been noise and none have materialised. Efforts by India, China, and Russia to restore trade links have helped minimize disruptions, suggesting that any supply disruptions will likely be temporary.
Oil prices have declined in recent weeks, falling to around USD 70 per barrel, as global supply remains strong and economic concerns weigh on the market.
Analysts expect Brent crude prices to average USD 73 per barrel in 2025 and USD 70 per barrel in 2026. Given the combination of strong supply and weak demand growth, the likelihood of prices falling further remains high.
The current market conditions suggest that risks are tilted toward the downside. If global economic activity slows down furtherparticularly due to US tariffsdemand for oil could weaken, pushing prices lower.
While OPEC+ has the ability to limit price increases by utilizing its spare capacity, there is no similar mechanism in place to support prices on the downside.
If Brent crude prices drop into the mid-USD 60s per barrel, OPEC+ may reconsider its decision and pause the unwinding of output cuts. However, as of now, supply remains strong, and no major disruptions have materialized to counteract the downward pressure on prices.
Additionally, supply from other oil-producing nations has increased, further stabilizing global availability. Overproduction beyond assigned quotas in some OPEC+ countriessuch as Kazakhstan, the UAE, Venezuela, and Libyahas added an estimated 0.4 to 0.5 mbd to global supply in February.
If the Iraq-Turkiye pipeline resumes operations, it could add another 0.4 mbd to the global supply.
While some supply risks remainsuch as potential disruptions in Venezuela or Iranmost sanctions-related concerns have had little real impact on the market.
If global economic conditions weaken further, the oil market could see an even larger surplus, leading to additional price declines.
HSBC report stated, "We believe risks are asymmetrically skewed to the downside in the current market regime. On the upside, prices remain firmly capped by OPEC+ spare capacity. There is no equivalent mechanism to underpin the downside - quite the opposite, as OPEC+ is set to restore rather than cut supply."
Report added, "Prices could fall if global trade and economic activity deteriorate, notably due to US tariffs. If Brent slides to the mid-USD60s/b, we would not rule out OPEC+ pausing the unwinding of its output cuts."
As a result, the oil market is now expected to be in a slight surplus of 0.2 million barrels per day (mbd) in 2025. This surplus is projected to grow significantly in 2026, potentially exceeding 1 mbd if OPEC+ continues with its planned production increases.
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