“There is a certain amount of uncertainty and that’s of a very high order,” he said, referring to wars in Ukraine, Gaza and the death of Iranian president in a helicopter crash. “Taking all that into account, I think oil prices are still holding.” Brent, the international crude benchmark, is currently around USD 82 per barrel.
“All the people who are invested in this ecosystem, they think that all the major stakeholders don’t want large-scale hostilities to break out,” he said, adding that there was an equilibrium between supply and demand in the physical market. Puri said the Iranian president’s death won’t impact the oil market.
“I would be much happier if it (oil price) came down to USD 70/barrel. But the oil producers will not be happy,” he said.
The members of the Organization of Petroleum Exporting Countries (OPEC) and their allies supply much less than their production capacity to control the oil market. They have kept about 7 million barrels per day of supplies off the market, Puri said.
Puri also supported the idea of Indian refiners jointly negotiating oil purchase deals. “Why should the Indian refiner not want to negotiate a good discount on a long-term basis?” he said. Indian refiners have been considering jointly purchasing from Russia to extract bigger discounts. Russia mostly sells its crude to Indian refiners in the spot market in a bid to keep discounts low. Russia’s Rosneft had a long-term deal with Indian Oil, which recently expired.
“You are holding one of the most important cards in your hand, which is the market card, which means that 5 million plus barrels a day are consumed in India,” he added, referring to India’s massive oil appetite and how this can be used to win better purchase terms.
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