The global oil market appears headed for a turbulent patch. Despite clear signs of a slowing global economy, the OPEC+ group is reportedly determined to increase oil supplies. This seems counter-intuitive at first glance. Why push more oil onto a market that already has sluggish demand, particularly with China showing no appetite for increased imports?

OPEC Market Share Battle

The primary driver, according to market reports, isn’t rising demand as OPEC+ claims, but a battle for market share. Over the past two decades, OPEC’s slice of the pie has halved from 50 percent to 25 percent. The expansion of US shale oil production, which now accounts for 20 percent of the market, and growth from other non-OPEC players have eroded the cartel’s dominance. OPEC+ (including Russia) holds 48 percent, but that, too, is shrinking. Keeping prices low, especially below the roughly $60-70 per barrel needed by shale producers to drill new wells profitably, is a tactic to slow down this competition and discourage new supply from coming online. With prices trading significantly below their March 2020 peak of $130, hovering around the critical $60 level, the pressure is on.

Adding to the supply-side equation is the UK’s push for G7 allies to lower the price cap on Russian oil. This move aims to further restrict Russia’s oil revenue, piling more pressure on its economy.

Microfinance Sector Shows Stress

Switching focus to the domestic front, a new report reveals a sharp drop in microfinance disbursements. Lending fell by a significant 38 percent in the March quarter of FY25 compared to the same period last year. While there was a sequential increase of 12.2 percent, this is attributed to seasonal factors rather than a fundamental shift. The gross loan portfolio also shrank by 14 percent year-on-year.

This decline indicates that lenders are exercising caution. There’s ongoing stress in the microfinance segment, likely influenced by a mix of factors including the repayment capacity of borrowers, potential regulatory shifts, and evolving collection practices. The sharp drop in disbursements suggests that despite seasonal bumps, the foundational health of lending at the grassroots level is facing headwinds. For many, microfinance is a key source of funds, and a slowdown here can ripple through local economies.

Both the global oil dynamic and the domestic microfinance trend point towards a period of caution. Whether driven by international cartel strategies or domestic financial realities, the signals suggest that aggressive growth assumptions, whether in oil supply or grassroots lending, are currently being tempered by underlying economic pressures and risk management.

What lies ahead? With global demand subdued and supply pressures mounting, oil prices could remain range-bound or even dip further, which is certainly good news for India. Domestically, the microfinance numbers warrant close observation; they offer a key barometer of economic health at the bottom of the pyramid. The next few months will show if this lending caution is a temporary blip or a longer-term trend reflecting broader economic challenges.