India has decided to fill the strategic petroleum reserves (SPR) to their full capacity and the first consignment of 1 million barrels of crude has been procured.
To take advantage of the low crude oil prices led by an unprecedented demand crisis in the global market, India is stacking up crude oil for the future. India has decided to fill the strategic petroleum reserves (SPR) to their full capacity and the first consignment of 1 million barrels of crude has been procured through Indian Oil, which has been unloaded at Mangalore SPR, the Ministry of Petroleum and Natural Gas said in a tweet. More low-price crude oil cargoes are lined up to reach Mangalore port before early May to completely fill the Mangalore and Padur SPRs, it added.
Petroleum reserves are made to ensure energy security and it becomes more important for India because the country imports a major portion of its oil requirements. In fact, crude oil is the largest portion of India’s imports and thus it majorly determines the country’s current account. The Indian government has set up nearly 5 million metric tons (MMT) of strategic crude oil storages at three locations that are Visakhapatnam, Mangalore, and Padur. These serve as a cushion during any supply disruptions.
However, India’s oil reserve is comparatively lesser than many advanced and emerging economies, which gives the country less scope to take more advantage of the situation. Oil prices in the global market have steeply fallen over the last few months due to a severe fall in demand and supply glut. The prices are further expected to fall despite an oil deal between OPEC+ nations. “While there is currently no clear data on just how bad the demand destruction caused by COVID-19 has been, estimates suggest we could be looking at a 30 million bpd oversupply. With that in mind, $15 WTI and lower remains a very real possibility,” said a report by OilPrice.