Energy Notes 9/04: Oil declines, India’s Renewable Energy Prowess

Amid intensifying rhetoric about a trade war, Brent crude futures dropped 3.39% to $60.69 per barrel, and U.S. West Texas Intermediate (WTI) crude futures fell 3.96% to $57.22 per barrel, both reaching their lowest levels since early 2021. ​The U.S. claims it has implemented a 104% tariff on Chinese imports after Beijing maintained its 34% retaliatory tariff on U.S. goods. Their talk has traders on tenterhooks on fears of a global economic slowdown. The situation is exacerbated by a glut of oil in markets; according to ONGC chief Arun Kumar Singh, oil markets have a “problem of plenty”. The result is a sharp decline in oil prices. 

Earlier this week, Goldman Sachs analysts said Brent crude could fall below $40 a barrel under more “extreme” circumstances. “In a more extreme and less likely scenario with both a global GDP slowdown and a full unwind of OPEC cuts, which would discipline non-OPEC supply, we estimate Brent would fall just under $40 a barrel in late 2026,” they wrote. Extreme scenarios notwithstanding, the firm’s base case scenario has a price prediction of $55 per barrel for oil.

Realignments in Coal  

Meanwhile, traders in China’s coal sector are tense over the implications of their country’s 34% import tariffs placed on US goods, beginning tomorrow. China announced additional duties on U.S. energy products, including a 15% tariff on coal and liquefied natural gas (LNG), and a 10% tariff on crude oil, effective February 10. These measures are part of China’s broader strategy to counter U.S. trade actions and protect its national interests. ​

China is the world’s biggest coal producer and can replace its paltry US coal imports with domestic supply. However, it will be difficult for the country to find another supplier for coking coal, which is mainly used for industrial applications. It is considering Russia and Venezuela as possible substitutes. US shipments of coking coal will be diverted to India; analysts say the realignments will affect prices, possibly making the final product more expensive. 

Overhanging the geopolitical developments is the prospect of a recession. The ongoing trade war has raised concerns about weakened energy demand from the world’s two largest economies.Analysts warn that continued hostilities could jeopardize anticipated oil demand growth in China, although domestic stimulus efforts may help mitigate some of the impact. ​

India Is the World’s Third Largest User of Renewables for Electricity

India has surpassed Germany to become the world’s third-largest producer of electricity from wind and solar energy, according to a recent report by global energy think-tank Ember. In 2024, wind and solar sources contributed to 10% of India’s electricity generation, nearly doubling over the past five years. 

But India’s share of clean energy remains below the global average of 15%, indicating room for further expansion. Hydropower remains India’s largest clean energy contributor at 8% of the energy mix. Notably, India added 24 GW of solar capacity in 2024, more than double its additions in 2023, positioning it as the third-largest globally after China and the US. 

Interestingly, the report stated that heat waves were responsible for a fifth of increase in electricity demand across the globe. According to the report’s authors, fossil fuel generation would have risen by only 0.2 percent in the absence of heat waves. 2024 was the hottest year on record. Coal and natural gas use spiked to meet demand for cooling during summer months in the US, China, and India. For example, coal was used to meet 70% of increased electricity demand in India last May.