India to release 5 million barrels of crude oil from strategic reserves

The US government has been unable to persuade OPEC+ to pump more oil, with major producers arguing the world was not short of crude. (Representative image)

India has agreed to release about five million barrels of crude oil from its Strategic Petroleum Reserves (emergency stockpile) in tandem with the United States, Japan, People’s Republic of China, the Republic of Korea, and other major economies to cool prices, the government said in a statement on November 23.

India stores about 38 million barrels of crude oil in underground caverns at three locations on the east and west coast.

Of this, about 5 million barrels will be released, starting as early as 7-10 days, the official, who wished not to be named said. The stocks will be sold to Mangalore Refinery and Petrochemicals Ltd (MRPL) and Hindustan Petroleum Corp Ltd (HPCL) which are connected by pipeline to the strategic reserves.

Though the release of 5 million barrels of crude is almost equivalent to less than half of India's daily domestic consumption, it is seen as a symbolic move as oil consumers are willing to band together against OPEC's reign over markets.

"India strongly believes that the pricing of liquid hydrocarbons should be reasonable, responsible and be determined by market forces," the government release said. Apart from this, the government said that it has repeatedly expressed concern at supply of oil being artificially adjusted below demand levels by oil producing countries, leading to rising prices and negative attendant consequences.

Prime Minister Narendra Modi has been consistently reviewing the high petroleum/diesel prices domestically. In a bid to control inflationary pressures, the central government on November 3 reduced the central excise duty on petrol and diesel by Rs 5 and Rs 10, respectively. It was followed by a reduction in VAT on fuel by many state governments. These difficult steps, despite the high fiscal burden on the government, were taken in order to provide relief to citizens, the statement added.

(With PTI inputs)