As oil prices dived on news that the US was considering record release from the reserves, India on Thursday said it supports the initiative to let out from the strategic stockpile to cool rising oil prices. Oil prices plunged on Thursday on news that the United States was considering releasing up to 180 million barrels from its strategic petroleum reserve (SPR).
International benchmark Brent crude fell around 4 per cent to USD 108.85 per barrel at around 13.30 hrs (IST). "Government of India (GoI) is closely monitoring global energy markets situation in the backdrop of evolving geopolitical events," Minister of State for Petroleum and Natural Gas Rameswar Teli said in a written reply to a question in Lok Sabha.
GoI, he said, "is ready to take all appropriate action, as deemed fit, including supporting initiatives for releases from SPR, for mitigating market volatility and calming the rise in crude oil prices." In November 2021, in a bid to control inflationary pressures, India, in consultation and parallelly with major energy consumers, had agreed to release 5 million barrels from its SPR.
Oil prices earlier this month surged to 14-year record highs on Russia's invasion of Ukraine and subsequent supply concerns, driving spikes in inflation across the global economy. While the International Energy Agency (IEA) will hold an emergency meeting on Friday to discuss oil supply concerns, the Organization of Petroleum Exporting Countries and its allies including Russia (known as OPEC+) will meet later on Thursday.
OPEC+ is expected to maintain its existing deal to slowly increase production, after cutting output substantially during the Covid-19 pandemic and associated fall in demand. Teli said India maintains SPR of 5.33 million tonne, or equivalent of about 9.5 days of crude oil requirement.
In addition, oil marketing companies (OMCs) currently have a capacity of 64.5 days. "Hence, the total storage capacity of crude oil and petroleum products is 74 days," he said.
While OMCs paused retail price revision during the period when international oil prices spiked to a 14-year high of USD 139, petrol and diesel prices have been since March 22 revised 9 times, totalling Rs 6.4 per litre. The opposition parties have accused the government of holding the rates when five states including Uttar Pradesh and Punjab went to the polls and raising prices after the elections were completed.
"Prices of petrol and diesel have been market-determined with effect from June 26, 2010, and October 19, 2014, respectively and are linked to the price of respective products in the international market," Teli said. "Since then, the public sector OMCs take appropriate decision on pricing of petrol and diesel in line with international product prices, exchange rate, tax structure, inland freight and other cost elements."
Besides petrol and diesel, cooking gas prices have also increased by Rs 50 per cylinder post ending of the elections. "For domestic LPG, the government continues to modulate the effective price to consumer to insulate the common man from rise in international prices," he said without elaborating.
India is dependent on imports to meet 85 per cent of its oil needs. Its major sources of crude oil are Iraq, Saudi Arabia, the UAE, Nigeria and the USA.
While OMCs have snapped distressed Russian oil being offered at a deep discount post-Ukraine war, Teli said: "less than 1 per cent of total crude oil (is) being imported from Russia in the year 2021-22 (till January)."
"Import of crude oil is carried out by Indian oil and refining companies in the public and private sector from diverse sources, including from sources in Russia, through business-to-business arrangements, based on techno-commercial considerations and domestic requirements," he added.