India has finally agreed upon releasing about five million barrels of crude oil from its Strategic Petroleum Reserves (emergency stockpile) reportedly. It is also reported that the 5 million barrels of crude oil are in tandem with the United States, Japan, People’s Republic of China, the Republic of Korea, and other major economies to cool down the high prices, as per the statement which was passed by the government on November 23.
As per the reports, it is known that India stores about 38 million barrels of crude oil in underground caverns, which are at three locations, falling on the east and west coast. According to an official, who opted not to disclose the name, said that out of these 38 million barrels, India decides to release about 5 million barrels, and the release will be started as early as 7-10 days. These stocks will be then sold to Mangalore Refinery and Petrochemicals Ltd (MRPL) and also to Hindustan Petroleum Corp Ltd (HPCL). These are connected by pipeline to the strategic reserves.
Even though the nation’s plan of releasing 5 million barrels of crude oil is almost equal to less than half of India’s daily domestic consumption, this decision taken by the government can be also seen as a symbolic move, it is because the oil consumers are willing to band together against OPEC’s reign over markets.
According to a press release which was issued by the government, it stated, “India strongly believes that the pricing of liquid hydrocarbons should be reasonable, responsible and be determined by market forces.” And apart from this, the government has also informed that it has repeatedly expressed concern about the supply of oil being artificially adjusted below demand levels by oil-producing countries which have now led to a rise in the price and also some negative attendant consequences.
As India was facing some issues, Prime Minister Narendra Modi has been reviewing the high petroleum/diesel prices domestically and consistently. In a bid for the control of inflationary pressures, on November 3rd, the central government reduced the central excise duty on petrol and diesel. The central government reduced it by Rs 5 and Rs 10, respectively, and it was followed by a reduction in VAT on fuel by many state governments. All these difficult steps, even though they led to the high fiscal burden on the government, were taken by the government so that it can provide relief to the citizens of India, the statement further added in the report.
Last week, the US made an unusual request to some of the world’s largest oil-consuming nations, which includes China, India, and Japan, for considering the release of crude stockpiles in a coordinated effort for lowering global energy prices. US President Joe Biden has also said about the release of 50 million barrels of oil from the US strategic reserves in a coordinated attempt with other countries to tamp down increasing fuel prices. “This release will be taken in parallel with other major energy consuming nations including China, India, Japan, Republic of Korea and the United Kingdom,” the White House said.
Last week in Dubai, Oil minister Hardeep Singh Puri said that the high prices will undermine the global economic recovery.
“We are working on releasing stocks from our strategic reserves in coordination with other nations,” the official said. “The release timing will depend on the US making a formal announcement.”
India is the world’s third-largest oil consumer and importing country, and has been severely affected by the relentless rise in international oil prices.