The world’s third largest oil importer, India, has decided to release 5 million barrels of crude oil from its strategic reserves in a concerted effort with other major oil-consuming nations such as the US, Britain, Japan, China and South Korea, to bring down global crude oil prices, which breached $85 a barrel mark last month. India has a crude storage capacity of 5.3 million tonnes (mt) — 1.33 mt in Visakhapatnam, and 1.5 mt in Mangaluru and 2.5 mt in Padur (Karnataka). This is the first time ever that India is releasing reserves and the contribution comprises around 13% of its 38 million-barrel stockpile. India is keen to counter the influence of the Saudi Arabia-led cartel on global crude oil supplies. The Organization of the Petroleum Exporting Countries (OPEC) accounts for a majority of India’s crude oil imports. India’s decision comes on the heels of the US announcing its plans to release 50 million barrels. Britain, on the other hand, said it would allow release of 1.5 million barrels of oil reserves. The administration of US President Joe Biden has pushed for a coordinated effort among nations with an aim to cool prices after OPEC and OPEC+ producers ignored repeated requests for more crude oil. Brent touched $86.40 a barrel on October 26 after which prices cooled to below $80 and are currently trading over $79 a barrel. OPEC and its allies, including Russia, have been adding around 4 lakh barrels per day to the market on a monthly basis, which is seen as insufficient to cool prices that had been rising as demand returns to pre-pandemic levels.
The move by India and other major oil-consuming nations to release crude oil reserves is seen more as a symbolic gesture to join against OPEC’s control over high crude prices, as the reserves will be exhausted in just a few days. India and other nations have failed to persuade OPEC and OPEC+ that rising crude prices will have an impact on global economic recovery. OPEC+ countries are scheduled to meet on December 2 to decide on raising or retaining production levels. India believes that high prices are leading to inflation and will impact recovery from the pandemic, and the pricing of crude oil should be reasonable, responsible and determined by market forces. Petrol and diesel prices touched record highs before the government cut taxes costing India Rs 60,000 crore in revenue this year. India’s repeated requests to OPEC have been ignored by the oil cartel, which has kept supplies just below demand to sustain high oil prices. India’s plan to release 5 million barrels of oil from strategic reserves may not alter its crude import plans as it is already selling less from the caverns than its target. However, the US-led standoff sets up a fight for control of the global energy market, which is in OPEC’s grip.
Now you can get handpicked stories from Telangana Today on Telegram everyday.