1、EQUITY:OIL&GAS/CHEMICALSIndia oil and gasGlobal Markets Research16 December 2025Energy markets:prices and insightsOMCs integrated margins holding up as lower crude oil price offsets INRs depreciationSoft oil prices will likely pressure new shale investments in the USAccording to Argus,falling oil pr

2、ices will likely have an impact on new investments in the US tight oil production capacity.For most shale producers,crude oil prices below USD60/bbl make new oil wells unprofitable as fixed costs like materials,pipes,pumps and chemicals have gone up and labor cost is significantly higher to keep up

3、with inflation.According to the latest Kansas City Fed Energy Survey,new wells have a breakeven price of USD63/bbl for WTI while the oil price should be above USD78/bbl for any substantial increase in drilling activity.Shale drilling activity is closely related to WTI prices with a lag of three mont

4、hs(see Fig.1);however,the sensitivity has come down in recent years as fewer rigs are required to drill more wells due to faster rate of drilling.Fig.1:Rig count vs WTI crude priceSource:Bloomberg Finance L.P.,Nomura research Russian crude discount maintained at USD7/bbl on China demandAccording to

5、Argus,the Russia crude discount to Dated Brent for India has slightly widened to USD7/bbl(see Fig.5)from USD6.9/bbl in the previous week,as Chinese buyers raised the offtake of cargos to take advantage of subdued Indian demand.According to Argus,Chinas independent refiners have likely bought 9-15mn

6、barrels of the Urals for arrival in Dec and Jan.Argus also reports that Indian OMCs are considering increasing the purchase of Urals while asking for additional documentation to verify the origin of cargoes as requested by Indian banks,to stay clear of sanctioned entities.Henry Hub gas corrects shar