The Centre on Saturday said it is open to support initiatives for releases from ‘Strategic Petroleum Reserves’ to mitigate market volatility and calming the rise in crude oil prices.
As per Ministry of Petroleum & Natural Gas: “India is also committed to supporting initiatives for releases from ‘Strategic Petroleum Reserves’, for mitigating market volatility and calming the rise in crude oil prices.”
Besides, the Ministry said that India is closely monitoring global energy markets as well as potential energy supply disruptions on the back of evolving geopolitical situation.
“With a view to ensuring energy justice for its citizens and for just energy transition towards a net zero future, India stands ready to take appropriate action for ensuring ongoing supplies at stable prices.”
Notably, India has built strategic petroleum reserves with a capacity to hold 5.33 million metric tonnes (MMT) or 38 million barrels of crude at three locations — Visakhapatnam, Mangaluru and Padur (TN).
Last year, India had decided to join the global alliance of major oil consuming countries by agreeing to release oil from its strategic oil reserve to address the supply constraint that has kept crude prices high.
Accordingly, the country had agreed to release 5 million barrels of crude oil from its strategic petroleum reserves.
Industry experts have told IANS, that continued hostilities between Russia and Ukraine as well as rising demand is expected to keep global crude oil prices in the range of $90-to-$100 per barrel in the short to medium term.
For India, the price range is a cause of concern as it may add Rs 8-to-Rs 10 in petrol and diesel’s selling prices, if the OMCs decide to revise the current prices.
At present, India imports 85 per cent of its crude oil needs.
Besides, the cascading effect of higher fuel cost will trigger a general inflationary trend.
Already, India’s main inflation gauge — Consumer Price Index (CPI) — which denotes retail inflation, has crossed the target range of the Reserve Bank of India in January.
The rise was blamed on high commodities costs.
As per industry calculations, a 10 per cent rise in crude oil prices adds nearly about 10 basis points in CPI inflation.
On Friday, a rise in the US oil inventories along with assurance of energy supply from Russia doused international crude oil prices.
Consequently, the price on Friday came down to $95 per barrel after the Russia-Ukraine war pushed Brent Crude Oil prices to $105 per barrel.
The present geopolitical tension has pushed Brent oil price from $80 per barrel to $105 per barrel for the first time since September 4, 2014.
Currently, Russia is one of the world’s top producers of crude oil and any western sanctions against the country will stiffen the global supply.