News

India is hoping for $50 a barrel as oil prices slide sharplyFor India, which relies on imported crude oil for over 80% of its needs, further increase in oil supply and a resultant fall in prices may be the much-need windfall, according to the country's chief economic advisor.By Sriram Iyer   May 5, 2025, 1:41:51 PM IST (Updated)3 Min ReadCrude oil prices are down sharply after the lobby of producers, OPEC+, led by Saudi Arabia and Russia, decided to raise output by 411,000 barrels a day from June 2025. The decision has come days ahead of Donald Trump's scheduled visit to the Middle East.

Global benchmark Brent tumbled as much as 4.6% toward $58 a barrel as the week’s trading kicked off, while West Texas Intermediate was near $56 early on May 5. Brent Crude is near a 4-year low it hit in early April 2025.

Falling oil prices are good for India. It would ease the pressure on the economy that's threatened by multiple uncertainties. "We may worry about the first, second, and third round impact of US tariffs , in terms of external demand to start with, and the overall uncertainty and, therefore, the implications for capital formation. One important thing is there is an unstated pursuit of lower oil prices, maybe as low as $50 a barrel," Chief Economic Advisor V Anantha Nageswaran said a day earlier.

The average price of the India's crude basket was $67.73 a barrel in April. It fell to $61.89 on May 1. For oil prices to fall further, the supply has to increase, assuming all other factors remain unchanged. Analysts believe there's room to increase supply even more than what has already been announced.

There are at least two reasons why the Saudi Arabia-led cartel may increase oil supply. First, to discipline the group’s own members. Saudi has alleged that Kazakhstan and Iraq have serially flouted production quota, producing more than they had agreed to. The second reason is the pressure from Trump to keep prices low.

 Forecast by...PriceMorgan Stanley (Likely price by fourth quarter of 2025)$62.5Goldman Sachs (Avg price for the rest of 2025)$60

Goldman Sachs had earlier said that crude oil prices may fall to even $40 a barrel in an extreme scenario. about it here.

For India, which relies on imported crude oil for over 80% of its needs, the falling price of crude oil will be a blessing. However, the latest forecasts, after the OPEC decision, are still a lot higher than what New Delhi is wishing for.

However, the impact may not be the same on everyone. Airlines like IndiGo and SpiceJet, as well as paint makers like Asian Paints and Berger, will gain from reduced cost. On the other hand, oil producers like ONGC and Oil India lose almost ₹300 crore to ₹400 crore in annual revenue for every $1 per barrel fall in crude oil.Continue ReadingFirst Published: May 5, 2025 12:52 PM ISTCheck out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!TagsBrent crude oilCrude oil price