Core Insights - Oil prices increased by approximately 1% following U.S. President Trump's announcement that Indian Prime Minister Modi pledged to stop purchasing oil from Russia, potentially impacting global supply [1][3] - Brent crude futures rose by 54 cents (0.87%) to $62.45 per barrel, while U.S. West Texas Intermediate (WTI) futures increased by 57 cents (0.98%) to $58.84 [1] Group 1: Market Reactions - Both Brent and WTI contracts had previously reached their lowest levels since early May due to U.S.-China trade tensions and warnings from the International Energy Agency about a significant surplus in the coming year as OPEC+ and other producers increase output amid weak demand [2] - The announcement regarding India's commitment to halt oil purchases from Russia is viewed positively for crude oil prices, as it removes a significant buyer from the market [5] Group 2: Geopolitical Context - India, which relies on Russia for about one-third of its oil imports, has been under U.S. pressure to cease these purchases, with Indian officials previously defending the imports as essential for national energy security [5] - The U.S. Treasury Secretary indicated expectations for Japan to also stop importing Russian energy, highlighting a broader strategy to cut off Moscow's energy revenues [4] Group 3: Sanctions and Regulatory Actions - The UK government announced new sanctions targeting major Russian energy companies, including Rosneft and Lukoil, affecting multiple oil terminals and entities involved in transporting Russian oil [6] - The sanctions also include specific entities such as Nayara Energy Limited, a Russian-owned refinery in India, indicating a tightening of the regulatory environment surrounding Russian oil imports [6] Group 4: Upcoming Market Indicators - Investors are anticipating the release of weekly U.S. inventory statistics from the Energy Information Administration (EIA), following mixed data from the American Petroleum Institute (API) [7]

Core Viewpoint - Oil prices are experiencing a significant increase, marking the steepest rise since early June, driven by Ukraine's attacks on Russia's energy infrastructure, which are prompting Moscow to restrict fuel exports [1] Group 1 - Oil prices have edged up on Friday, indicating a potential upward trend in the market [1] - The current rise in oil prices is attributed to geopolitical tensions, particularly Ukraine's actions against Russian energy assets [1] - Moscow's response includes restricting fuel exports, which could further impact global oil supply [1]

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Viewpoints - Concerns over supply shortages have led to a surge in oil prices, but the impact on Asia is expected to be manageable due to lower oil burdens and moderate inflation [1][9] - If oil prices remain above $85 per barrel and the dollar continues to strengthen, it may delay interest rate cuts in the region [1][9] - Countries like Thailand, South Korea, and India face greater growth downside risks due to larger oil and gas trade deficits [3][9] Summary by Sections Oil Price Impact - The report estimates that a $10 increase in oil prices could raise Asia's CPI and current account balance by 40 basis points [8][36] - Asia's oil burden is currently below its long-term average, with projections indicating it could drop to 2.8% of GDP if oil prices average $75 per barrel [14][15] Trade Balance - Asia is the most oil-import dependent region, with oil accounting for 25% of its energy needs, and 80% of oil demand met through imports [10][12] - As of April 2025, Asia's oil and gas trade balance was -2.4% of GDP, compared to -1.7% for the Euro Area and 0.04% for the US [10][13] Macroeconomic Stability - Current macroeconomic indicators in Asia show good stability regarding inflation and current account balances [22] - Inflation is projected to rise slightly with oil price increases, but most economies are within central banks' comfort zones [22][36] Central Bank Policies - The report discusses how rising oil prices may influence monetary policy across different countries, with varying degrees of sensitivity to inflation and growth risks [47][48] - Countries like Australia and India may maintain a dovish stance despite rising oil prices, while the Philippines faces the highest risk due to its significant oil price exposure [49][52]