Oil Prices Unlikely To Revisit 2015-16 Lows Despite Tariff Tensions: BPCL

Despite US sanctions, Russian oil remains “more commercially viable” compared to other sources, & BPCL is facing no challenges in either sourcing or making payments for it, BPCL Director-Finance noted

Gupta noted that current geopolitical uncertainties are already dampening global demand, exerting downward pressure on oil prices

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Oil prices are unlikely to drop sharply to the lows witnessed in 2015–16, which had significantly benefited India, according to the finance chief of Bharat Petroleum Corporation Limited (BPCL). He noted that uncertainties surrounding US tariffs are expected to be resolved within the next two to three months, and producers may implement supply cuts to prevent a steep decline in prices.

These are good times for oil marketing companies, BPCL Director-Finance Vetsa Ramakrishna Gupta told The Economic Times in an interview, highlighting the strong cash flows and improved margins driven by lower crude prices, as per The Economic Times Report.

Despite US sanctions, Russian oil remains “more commercially viable” compared to other sources, and BPCL is facing no challenges in either sourcing or making payments for it, he noted.

Gupta added that oil prices are expected to remain in the $60–65 per barrel range over the next two to three months, with a potential rise to $65–70 per barrel once uncertainties around US tariffs are resolved.

The ongoing tariff dispute between the US and major global economies is expected to be resolved in the coming months, said BPCL Director-Finance. He described the recent tariff announcements—exceeding 100 per cent on each other’s goods by the US and China—as “tactical moves” ahead of negotiations. The US cannot survive without China, and China cannot survive without the US, he remarked, expressing confidence that a deal between the two powers is inevitable.

Geopolitical Uncertainties

Gupta noted that current geopolitical uncertainties are already dampening global demand, exerting downward pressure on oil prices. However, he ruled out a repeat of the dramatic price crash seen in the previous decade, when crude fell from over $100 per barrel in mid-2014 to below $30 in early 2016, benefiting Indian refiners, consumers, and the government. Brent crude averaged $44 per barrel in 2016, down from $52 the previous year.

“I don’t see prices falling drastically. If crude dips to $50–55 per barrel, producers will automatically begin cutting output,” he said, adding that OPEC would likely be the first to act. Even U.S. shale producers would likely hold back investments at those levels. “Most of the new US shale drilling cost is in the $45-50 per barrel range. They will take a pause. They will not go for cash loss. They will need $65-70,” he explained.

Gupta stressed that BPCL’s top priority is ensuring uninterrupted fuel supply to its customers. “My market supply should not be disrupted. Price will go up, come down,” he said, states the report.

The recent decline in crude prices will likely reflect as inventory losses for oil marketing companies in the first quarter, Gupta noted. While falling crude prices initially improve refinery margins by lowering fuel costs, these benefits are gradually absorbed into product pricing.

BPCL currently operates three refineries with a combined capacity of 35 million tonnes per year and manages a nationwide network of 23,000 fuel stations.