BRICS has the oil jackpot. Now comes the hard part

BRICS is emerging as an increasingly important force in global energy markets, bringing together some of the world's largest oil producers and consumers under one grouping. As its leaders gather in New Delhi on September 12 and 13, energy security, the West Asia conflict, and trade are likely to feature prominently in the discussions.

What started as a Wall Street acronym for Brazil, Russia, India and China, with South Africa joining later, has grown into a grouping of 11 countries. Together, they account for around a quarter of global nominal GDP and nearly half of the world's population. They also include some of the world's biggest oil producers — Saudi Arabia, Russia, Iran and the United Arab Emirates (UAE) — alongside major energy consumers such as India and China.

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That mix gives BRICS considerable weight in the global energy market, but it also highlights one of its biggest challenges: its members do not always share the same interests on energy security or geopolitics.


Oil power, but no common energy policy

With Russia, Saudi Arabia, Iran and the UAE among its members, BRICS accounts for roughly 41% to 47% of global crude oil production. But the grouping is far from being an oil cartel.

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Its members have very different energy needs. Some depend heavily on oil and gas exports, while others are major importers. China and India are among the world's largest energy consumers, while other members are looking to expand their renewable-energy manufacturing capacity.

That makes a common energy policy difficult.

"BRICS cannot and will struggle to serve as a safety net during energy crises or global resource crunches, notwithstanding the fact that the BRICS+ coalition controls over 42% of global crude oil production and roughly half of the world's proven natural gas reserves because it lacks the institutional framework, unified political will, and physical infrastructure required to manage real-time supply or price disruptions," Burzine Waghmar of the SOAS South Asia Institute, University of London, noted in an email response to ET Online.


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The New Delhi summit comes months after the US and Israel launched military strikes against Iran, a BRICS member since 2024. The conflict disrupted shipping through the Strait of Hormuz, one of the world's most important oil routes, and pushed crude prices above $100 a barrel.

Brent futures touched $102.07 a barrel on Thursday as fresh attacks on maritime shipping raised concerns further over supplies through the Strait of Hormuz. The waterway previously carried about one-fifth of global oil and gas supplies, making any prolonged disruption a major risk for energy-importing economies in Asia.

The fallout has also created a direct problem within BRICS. The UAE, after saying it had come under Iranian missile attacks, suspended trade and financial transactions with Iran in August.

The question now is whether the two countries can agree on the language of a joint BRICS statement on the conflict.


Kremlin spokesman Dmitry Peskov said differences between the UAE and Iran had a "negative impact" and were making it harder to draft a joint declaration. He said he hoped the leaders could find wording acceptable to both sides.

There is some hope that they can. At the Shanghai Cooperation Organisation (SCO) summit earlier this month, countries with different positions on the conflict managed to agree on a joint declaration.

Former Indian diplomat Rajiv Bhatia, as per a Reuters report, said the outcome showed that such groupings could find common ground despite differences.

"There has been a significant forward movement in Bishkek at the SCO summit," Bhatia said. Despite SCO having members that are pro-U.S., "they were able to bring out a formulation which was acceptable to all sides."


The BRICS meeting has brought several key leaders to New Delhi. Chinese President Xi Jinping is visiting India for the first time in seven years. Russian President Vladimir Putin, Iranian President Masoud Pezeshkian, South African President Cyril Ramaphosa and Indonesian President Prabowo Subianto are also attending, along with UN Secretary-General António Guterres.

Bigger shift beyond oil

The energy debate is only one part of the larger BRICS story. The group is also trying to increase the use of local currencies in trade.

US President Donald Trump's criticism of BRICS and his threat of additional tariffs against countries aligning with what he called the bloc's "anti-American policies" have added to the broader economic context surrounding the group.

For now, markets are not expecting the New Delhi summit to trigger a major change in oil prices. The more important developments may be longer term.

Radhika Rao, senior economist and executive director at DBS Bank, said the West Asia conflict and energy-market concerns were likely to be discussed, given the different mix of energy producers, importers and clean-energy manufacturers within BRICS.

“Tensions in West Asia and broader energy-market concerns, are expected to feature in discussions, especially as the wider BRICS group (11 countries) comprise of a mix of key hydrocarbon exporters, fossil fuel-dependent countries, clean energy manufacturers, and energy-import-intensive economies,” Rao said.

“While renewable capacity additions have accelerated, a parallel increase in fossil fuel capacity highlights the heterogeneity of member economies. Any consensus on a common energy security framework will be under watch. The summit is unlikely to move markets, but it should underscore the steady push towards local currency trade and alternative financing mechanisms in a more multipolar world order.”

BRICS may have sufficient weight in oil markets to matter in global energy markets, but its members are too different to function as a single energy bloc. Its influence is more likely to grow through trade, payments and financing, gradually changing how energy and other commodities are bought and sold.