As oil prices fell following news that the US was considering a record release from reserves, India on Thursday said it supported initiatives to release from strategic reserves to cool rising oil prices.
Oil prices plunged on Thursday following news that the United States was considering releasing up to 180 million barrels from its strategic petroleum reserves (EC).
The international benchmark Brent crude fell about 4 percent to $ 108.85 a barrel at around 1:30 p.m.
“The Government of India (GoI) is closely monitoring the situation of the global energy market against the background of evolving geopolitical events,” Minister of State for Petroleum and Natural Gas Rameswar Teli said in a written reply to questions at the Lok Sabha.
The government, he said, was “prepared to take all appropriate actions, as it deems appropriate, including supporting initiatives for output from the EC, to reduce market volatility and calm rising crude oil prices.” In November 2021, in an effort to control inflationary pressures, India, in negotiations and in parallel with major energy consumers, has agreed to release 5 million barrels from its EC.
Oil prices earlier this month jumped to a 14 -year high following Russia’s invasion of Ukraine and subsequent supply concerns, prompting a surge 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 the Petroleum Exporting Countries and its allies including Russia (known as OPEC) will meet later on Thursday.
OPEC is expected to maintain its existing agreement to increase production slowly, after significantly reducing production during the Covid-19 pandemic and the associated drop in demand.
Teli said India maintained the EC at 5.33 million tonnes, or the equivalent of about 9.5 days of crude oil requirements.
In addition, the oil marketing company (OMC) currently has a capacity of 64.5 days.
“Therefore, the total storage capacity of crude oil and petroleum products is 74 days,” he said.
Although the OMC stopped revising retail prices during a period when international oil prices soared to a 14 -year high of $ 139, petrol and diesel prices have been revised 9 times since March 22, totaling Rs 6.4 per liter.
Opposition parties accused the government of withholding the rate when five states including Uttar Pradesh and Punjab went to the polls and raised prices after the election was over.
“Petrol and diesel prices have been determined by the market effective June 26, 2010, and October 19, 2014, respectively and are linked to the prices of their respective products in the international market,” Teli said.
“Since then, the public sector OMC has taken appropriate decisions on fixing petrol and diesel prices in line with international product prices, exchange rates, tax structure, land transportation and other cost elements.” Apart from petrol and diesel, the price of cooking gas has also increased by Rs 50 per cylinder after the end of the election.
“For domestic LPG, the government continues to modulate effective prices to consumers to protect ordinary people from international price increases,” he said without commenting further.
India relies on imports to meet 85 per cent of its oil needs.
Its main sources of crude oil are Iraq, Saudi Arabia, the UAE, Nigeria and the United States.
While the OMC has stopped troubled Russian oil being offered at huge discounts after the Ukraine war, Teli said: “less than 1 percent of total crude oil (is being) imported from Russia in 2021-22 (as of January).”
“Crude oil imports are carried out by Indian oil and refining companies in the public and private sectors from various sources, including from sources in Russia, through business-to-business arrangements, based on techno-commercial considerations and domestic needs,” he added.