New Delhi [India]: Despite the new US sanctions imposed in January, Russian oil exports have remained largely unaffected, according to a report by HSBC Global Research.
The report states:
“Russian exports have continued almost as normal despite new US sanctions announced in January.”
Minimal Impact on Supply & Market Stability
The lack of supply disruptions has kept the oil market stable, with HSBC noting that most sanctions-related concerns have not materialized into real supply issues. Efforts by India, China, and Russia to maintain trade links have helped minimize disruptions, indicating that any future supply disruptions would likely be temporary.
Oil prices have declined in recent weeks, dropping to around USD 70 per barrel, due to strong global supply and concerns over economic growth. Analysts predict that Brent crude prices will average USD 73 per barrel in 2025 and USD 70 per barrel in 2026. Given the combination of high supply and weak demand growth, there is a greater likelihood of prices falling further.
OPEC+ & Market Dynamics
The report highlights that while OPEC+ has the ability to curb price increases through spare capacity, it lacks a similar mechanism to prevent further price declines. If Brent crude prices fall to the mid-USD 60s per barrel, OPEC+ may reconsider its decision and pause the planned unwinding of output cuts.
Meanwhile, increased production from other oil-producing nations, including Kazakhstan, UAE, Venezuela, and Libya, has added an estimated 0.4 to 0.5 million barrels per day (mbd) to the global supply in February. Additionally, if the Iraq-Turkiye pipeline resumes operations, another 0.4 mbd could be added to the market.
Future Outlook: Surplus & Price Risks
HSBC projects that the oil market will have a slight surplus of 0.2 mbd in 2025, which could grow significantly in 2026 to exceed 1 mbd if OPEC+ proceeds with its planned production increases.
The HSBC report warns:
“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.”
It further adds:
“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.”
With ongoing economic uncertainties and trade policies affecting global oil demand, the market remains vulnerable to further price drops unless significant supply disruptions or policy changes occur.