Crude Braces For Decline As India May Refrain From Russian Oil. Forecast as of 26.08.2025
The oil market is moving towards an expected surplus. It is so significant that the downward trend for Brent will likely persist. However, geopolitics will trigger corrections. Let’s discuss this topic and make a trading plan.
The article covers the following subjects:
Major Takeaways
- India is reducing its purchases of Russian oil.
- Speculators have reduced their long trades in WTI to a 17-year low.
- The oil market is moving towards a considerable surplus.
- A rebound from $68.8 and $70.2 will give a sell signal for Brent.
Weekly Fundamental Forecast for Brent
Donald Trump wants to lower oil prices, which is expected to curb inflation in the US. However, the US leader aspires to be remembered as a peacemaker. To achieve this ambitious goal, he should end the Ukraine crisis. Oil steps in as the primary lever of influence. According to Westpac, the introduction of double tariffs against India for purchasing Russian oil could lead to Brent crude returning to above $70 per barrel.
Crude prices have tumbled by approximately 10% since the beginning of the year, driven by expectations of a substantial surplus in the market due to increased OPEC+ production. The decline is also attributable to the global economic slowdown and the impact of Donald Trump’s tariff policy on oil demand. As expected, speculators have decreased their net long positions in oil to the lowest level in 17 years.
Speculative Positions on WTI
Source: Bloomberg.
The significant surplus indicates that the downward trend for Brent will persist. However, there will be drivers that will trigger corrections. In some cases, these drivers can be quite powerful. Currently, geopolitical factors play a significant role in this regard.
The impact of these developments is twofold, with attacks by Ukrainian drones and, most significantly, Delhi’s purchases of Russian oil directly affecting the short-term prospects for oil. Beginning on August 27, President Trump is prepared to implement a tariff increase on imports from India if the country continues to buy Russian oil. A 50% tariff will render the Asian country’s $85 billion in exports uncompetitive.
India finds itself between a hammer and a hard place. The country wants to purchase Russian oil only if it is profitable, while creating a way to curtail the purchases at any moment. At the same time, oil refineries plan to reduce supplies from Moscow to 1.4–1.6 million bpd from October. In the first half of the year, the average was 1.8 million bpd.
Indian Imports of Russian Oil
Source: Bloomberg.
Delhi is attempting to maintain its reputation and friendly relations with Moscow, despite the prevailing sense of urgency in the Asian nation. The premium between Brent and Dubai crude oil has turned negative for the first time in some time. The discount indicates that a third party is currently purchasing oil from the UAE. According to individuals with knowledge of the matter, Indian accounts may be implicated.
Brent-Dubai EFS Crude Premium
Source: Bloomberg.
Weekly Trading Plan for Brent
Meanwhile, India’s actions and statements are not always aligned, while Russia may lose its largest oil buyer. Against this backdrop, the downward trend in oil prices will continue. However, the US’s recent decision to raise tariffs on Delhi from 25% to 50% may provide an opportunity for Brent to correct. At the same time, a rebound from the resistance levels of $68.8 and $70.2, or a fall below $66.25, should be used for opening short positions.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of UKBRENT in real time mode
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