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India is going to release 5 million barrels of oil from its strategic reserves as part of a coordinated challenge led by the US against the OPEC+ producers’ cartel’s move to curb output.
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This would be the first instance of India using strategic reserves to influence international prices.
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OPEC+, led by Russia, are trying to decide production quotas, keeping supply below demand, so that they can get higher prices for crude.
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Coordinated release of reserves by large oil consuming countries would bring down the crude prices.
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Saudi and Russia are the largest oil producers in the OPEC+ group. They indicated plans to gradually increase production in the light of releases from strategic reserves.
What are India’s strategic petroleum reserves, and why are they needed?
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India’s strategic reserves aims to build an emergency stockpile of crude oil.
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These are created on the lines of the reserves that the US and its Western allies set up after the first oil crisis of 1973-74.
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These facilities can provide for about 9.5 days of India’s crude oil requirements based on 2019-20 consumption levels.
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Need: India imports about 85% of its crude oil requirements. The International Energy Agency (IEA) recommends that all countries hold crude oil stocks worth 90 days of imports.