How India is taking advantage of low crude oil prices: Importing and filling up as much as it can

By: |
Updated: Apr 15, 2020 5:08 PM

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.

crude oil, strategic petroleum reserve, SPR, low crude priceMore low-price crude oil cargoes are lined up to reach Mangalore port before early May to completely fill the Mangalore and Padur SPRs.

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.

Also Read: How weather affects India’s economy; RBI reveals role of temperature, humidity, climate in GDP growth

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.  

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Rural India surprises with job loss amid peak harvesting season in October; labour market stagnates
2Marrying above legal age is good economic strategy for men, women; SBI research reveals why
3India recorded export growth of 4 per cent in September: UNCTAD