Brent Falls to $62 as India Cuts Russian Imports -

Brent Falls to $62 as India Cuts Russian Imports

Introduction

Over the past week Brent crude traded around $62–63 per barrel after dipping to a one‑month low, driven by a mix of concrete supply and demand developments. Two themes dominated price action: a material swing in crude flows as India scales back purchases of Russian oil, and continued signs of an oversupplied market highlighted by IEA and EIA inventory data. Short covering and localized geopolitical disruptions briefly supported the price, but major forecasters and agencies warn of further downside through 2026 if supply growth persists.

Key Price Drivers This Week

India’s abrupt reduction of Russian crude

One of the most market‑sensitive developments was India’s move to sharply curtail Russian imports in December. After buying near 1.87 million bpd in November, sources indicate Indian imports of Russian crude could fall to roughly 600,000–650,000 bpd the following month. For a country that had been the marginal buyer absorbing heavily discounted Russian barrels, this is a seismic flow shift that tightens demand for seaborne Russian cargoes and forces refiners to seek alternatives or idle capacity.

Implication: dislocated cargoes and longer‑term trade re‑routing will show up in tanker storage, freight spreads and charter markets. In price terms, the net effect is ambiguous short term — less Indian demand supports lower Brent — but it also increases logistical friction that can locally tighten refined product balances and support regional cracks.

Inventory builds and supply growth (IEA, EIA, API)

Data from the IEA and U.S. EIA pointed to rising global inventories and accelerating supply. The IEA’s November update highlighted a multi‑million bpd increase in supply year‑to‑date, with cumulative inventory builds returning to the highest levels since mid‑2021. The EIA’s short‑term outlook lifted its 2025 Brent average slightly but still forecasts a marked drop for 2026, underscoring an expected surplus.

U.S. weekly data (API and government releases) have shown material crude and product stock builds in recent weeks, signaling weaker demand and ample refinery throughput. Elevated inventories compress the premium for dated North Sea grades and cap upside for Brent absent an unexpected demand impulse or coordinated supply cuts.

Geopolitics, technical factors and refining margins

Geopolitical events offered intermittent support. Strikes on Russian export infrastructure and refineries have tightened diesel availability in parts of Europe, lifting diesel margins even while Brent softened. Meanwhile, short‑covering and positioning adjustments contributed to the modest rebound from the lows — a common technical response when prices flirt with short‑term support levels.

Analyst outlook: JPMorgan and downside risk

Major bank forecasts have reinforced the bearish base case. JPMorgan outlined a scenario of persistent oversupply that would push Brent well below current levels through 2026–2027, citing robust non‑OPEC production growth and sluggish demand. Even conservative agency forecasts see lower average prices in 2026 versus 2025. These projections have influenced fund positioning and derivative pricing, increasing the probability of lower forwards and flatter curves.

What This Means for Traders and Investors

Short term (weeks)

Expect Brent to remain range‑bound around the low $60s, with price spikes possible on logistics disruptions or surprise drawdowns. Tactical traders should monitor weekly inventories, European refining margins, and immediate cargo re‑allocations out of Russia to spot transient tightness.

Medium term (2026)

Fundamental risks point downward: planned and unplanned supply increases — especially from non‑OPEC producers — and elevated global stocks support forecasts in the mid‑$50s average for 2026 by agencies and some banks. Investors should hedge exposure to extended weakness or consider relative value plays in the refined products complex, where regional bottlenecks can create asymmetric opportunities.

Risk triggers to watch

• OPEC+ policy changes or voluntary cuts that remove surplus barrels.
• Faster‑than‑expected demand recovery in major economies (transport fuel, petrochemicals).
• Disruption to Russian exports beyond localized strikes (export terminals, insurance constraints, shipping sanctions).
• Sharp compliance moves from major buyers like India — if reversed, this could re‑absorb displaced Russian volumes and lift prices.

Conclusion

This week’s Brent price action reflects a clear tug‑of‑war: structural oversupply and rising inventories have put downward pressure on prices, while cargo re‑routing, regional diesel tightness and technical buying have offered temporary support. India’s rapid cutback of Russian crude purchases is the single most tangible demand‑shift event — it reconfigures flows and elevates short‑term logistical risk, but in aggregate it currently reinforces the bearish supply narrative that many forecasters see playing out into 2026.

For energy investors, disciplined risk management—careful monitoring of inventory releases, cargo flows, refinery margins and policy moves—remains critical. Position sizing should reflect the high probability of lower spot and forward prices absent coordinated supply adjustments or a meaningful demand surprise.