Page 5 - Policy Economic Report - July 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

to attain the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4
per cent within a band of +/- 2 per cent, while stepping up growth momentum.

The HSBC Flash India Manufacturing PMI reached 59.2 in July 2025, its highest level in nearly 17.5 years,
according to PMI data released by S&P Global. This surge, up from 58.4 in June, signals robust growth in
the manufacturing sector, driven by strong domestic and global demand. Composite PMI reached 60.7,
the fastest upturn in over a year, driven by buoyant demand, technological investments, and expanded
capacities. There is a firm pick-up in employment, especially in the service sector, suggesting healthy job
creation accompanies the expansion of both India's manufacturing and service sectors.

On the external front, India's forex reserves dipped by $1.18 billion to $695.49 billion for the week ending
July 18, according to the data released by Reserve Bank of India. For the week ended July 18, foreign
currency assets, a major component of the reserves, slipped by $1.201 billion to $587.609 billion.
However, the gold reserves increased by $150 million to $84.499 billion during the week. The Special
Drawing Rights (SDRs) were down by $119 million to $18.683 billion. India's reserve position with the IMF
declined by $13 million to $4.698 billion in the reporting week.

India’s total exports (Merchandise and Services combined) for June 2025 are estimated at USD 67.98
Billion, registering a growth of 6.50 percent vis-à-vis June 2024. Total imports (Merchandise and Services
combined) for June 2025 are estimated at USD 71.50 Billion, registering a growth of 0.50 percent vis-à-vis
June 2024. India’s total exports during April- June 2025 are estimated at US$ 210.31 Billion registering a
growth of 5.94 percent. Total imports during April- June 2025 are estimated at US$ 230.62 Billion
registering a growth of 4.38 percent.

As far as oil and gas industry is concerned, benchmark crude oil prices increased by approximately $7 per
barrel on average in June, fluctuating widely between $65 and $80 per barrel. Prices spiked mid-month
following Israeli air strikes on Iranian military and nuclear facilities, with North Sea Dated briefly exceeding
$80 per barrel. However, prices subsequently returned to pre-conflict levels after a ceasefire agreement
was reached.

These developments occurred amid growing geopolitical tensions and an apparently oversupplied market.
In June, global oil production increased by 950 kb/d month-on-month to 105.6 mb/d—representing a
significant 2.9 mb/d rise compared to the same period last year. Beginning July 2025, the OPEC+ alliance
announced a larger-than-anticipated increase in production targets for August by 550 kb/d, effectively
reversing 80% of the 2.2 mb/d voluntary production cuts that have been in place since 2023.

Furthermore, China’s newly implemented policies to enhance energy security are positioning national oil
companies as strategic storage partners for the government. This approach effectively removes significant
volumes from the global market. Chinese firms are expected to continue expanding inventories, and the
rate at which these stockpiles grow in the coming months will play a critical role in shaping the global oil
market balance.

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