Informist, Friday, Aug. 1, 2025

By Ashutosh Pati

MUMBAI – Crude oil prices are expected to remain in a broad range in August with a positive bias as market participants navigate concerns about demand, a potential supply hike by the Organization of the Petroleum Exporting Countries and its allies, and possible supply disruptions arising from US President Donald Trump's threats to Russia.

As per the median of estimates from eight broking firms polled by Informist, the August crude oil contract on the Multi Commodity Exchange of India is seen at INR 5,575-INR 6,410 per barrel this month. The September contract of West Texas Intermediate crude on the New York Mercantile Exchange is seen at $64.0-$75.0 per barrel during the month.

Trade tariffs and possible sanctions on Russian oil will lead to stiff volatility in prices, which will be in a broad range with little positive triggers, said Jateen Trivedi, vice president, research analyst - commodity and currency at LKP Securities.

Crude oil prices surged this week after Trump imposed a new deadline of 10-12 days on Russian President Vladimir Putin to reach a truce with Ukraine. Trump had earlier threatened 100% secondary tariffs on countries that buy Russian oil unless Moscow agrees to a peace deal. This comes on the back of the latest sanctions package by the European Union against Russia, including a lower price cap on the country's crude and the import of refined products made from Moscow's oil in other countries.

However, this might not be enough to push prices out of the range-bound movement witnessed recently as analysts expect the tariffs announced by the US to pose a major risk to demand for the commodity. Sriram Iyer, senior research analyst at Reliance Securities, said the blanket 10% tariffs may lead to a demand-destruction.

Trump on Thursday signed an executive order which modified reciprocal tariffs on several countries, with updated tariffs now ranging from 10-40%. Trump said countries that are not listed in the latest order will face an additional tariff of 10%. According to the White House, all goods that are considered to have been transhipped to avoid the import duties will be subjected to additional 40% tariff. Canada now faces a 35% duty and Brazil was slapped with 50%. India faces 25%, Taiwan 20%, and Switzerland is subjected to 39% of import duty.

Two major events for the oil market are due in the next few days – the meeting of OPEC and allies on Sunday, and expiry of the Aug. 8 ultimatum issued by Trump to Moscow. Market participants have mostly factored in another supply hike from the oil cartel. "A further increase in production of almost 550,000 barrels per day, the final step toward normalising supply, is considered a done deal," Barbara Lambrecht, commodity analyst at Commerzbank, said in a report. "Prices are unlikely to react much to this."

Eight member nations of the cartel--Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman--have aggressively increased production in the last few months. Media reports suggest that the move was led by the de-facto leader of the group, Saudi Arabia, to punish nations which are producing more oil than their assigned quotas, such as Iraq and Kazakhstan.

Despite these supply hikes, crude oil prices have risen in the last three months because of strong summer demand from the West. "The market is cautious heading into the weekend's OPEC meeting," Daniel Hynes, senior commodity strategist at ANZ Research, said in a note. "Ever since OPEC announced it would aggressively unwind voluntary production cuts, expectations of a slump in prices have been building. Instead, OPEC's move has been timed perfectly to match with a seasonal bounce in demand."

Concerns about supply disruptions have risen since Trump's announcement as Russia supplies around 7 million barrels per day of oil to the global market. "OPEC would still have spare capacity to compensate for some of the Russian oil 'shortfall'. However, it is questionable whether it would be willing to step into the breach quickly, given that Russia is an associate member," Commerzbank's Lambrecht said.

If the spare capacity falls to a critical level, there would be insufficient cushion for further unplanned production outages, which in turn would cause oil prices to rise significantly, Lambrecht added. "The key question now is whether buyers will be swayed by the US president's threat and whether Trump will actually make good on his tariff threat," he added.

Meanwhile, Deveya Gaglani, senior research analyst-commodities at Axis Securities, said crude oil prices are expected to stay in the positive zone as long as $68-per-bbl level is intact. At 1957 IST, the most-active September crude oil contract on the NYMEX was 1.8% lower at $68.02 per barrel and the most-active August contract on the MCX was 2.1% lower at INR 5,928 per barrel.

Following is a summary of the poll by Informist on crude oil prices for August and details of the estimates by respondents:

End

US$1 = INR 87.54

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Tanima Banerjee

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