The market narrative consuming crude oil markets currently is the interplay between supply cuts by OPEC and its allies and rising US shale output, with a side helping of Chinese imports driving demand.
While there are solid reasons for industry participants to focus on these dynamics, there is also the risk of missing out on other factors that help shape the market.
Such a factor is India, which has long flown below the radar of the crude oil market, despite becoming the second-biggest importer in the fast-growing Asian market behind China, and the third-biggest in the world after the United States.
India is also a market where there is virtually no direct influence being exerted by US shale oil as the South Asian nation hardly imports any crude from the United States.
It also imports a relatively small amount from Russia, the main ally in the agreement between the Organization of the Petroleum Countries and other producers to limit output in order to drain excess global inventories, thereby boosting crude prices. Read More…