- India-US-China-Japan join hands to reduce crude prices
- India will release a reserve stock of 5 million barrels of crude
- The United States announced that it would use 50 million barrels of stock
- OPEC’s strategy of using reserve stock instead of importing crude
Countries including India, US, China, Japan have taken a stand to bring pressure on OPEC (Organization of the Petroleum Exporting Countries) countries to reduce international crude oil prices and increase crude production.
As part of this strategy, India and the United States have started using crude oil from their strategic petroleum reserves. On Tuesday, India decided to release 5 million barrels of crude oil for the first time out of its total reserves of 38 million barrels.
So the US also announced the release of 50 million barrels of crude from its reserves. Japan, China and South Korea are also expected to release their own reserves of crude.
India has reserve stock of crude oil in underground tanks at three places on the east and west coasts with a capacity of 38 million barrels. The crude oil released from the reserve stock will be sold to Mangalore Refinery and Hindustan Petroleum, a senior government official said on Tuesday.
Both these state-owned refineries are connected by pipeline with reserve stock. The official also said that a formal announcement would be made soon and India may release more crude from the reserves in the coming days.
The central government had reduced excise duty on petrol and diesel a day before Diwali. However, petrol is still around Rs 100 and diesel around Rs 90 per liter in many states of the country.
International crude oil prices are likely to fall. The
29 member countries of the International Energy Agency have reserves of crude. These countries can reserve as much crude as their daily requirement for 90 days. These countries include the United States, Britain, Germany, Japan, and Australia. Japan has the largest such reserve stock after China and the US. Petrol-diesel prices could fall worldwide if these countries release crude from reserve stocks. At the end of October, crude oil prices hit 85 85 a barrel, the highest since 2014. However, at present the price has come down to 80 80.
India stores 38 million barrels of
crude oil at 3 locations India’s reserve stock is approximately 38 million barrels. India is the world’s third largest importer of crude oil.
Why the need to put pressure on OPEC?
The Corona period saw a decline in worldwide consumption of crude oil, which also led to a decline in production by crude-producing countries. As the Corona eased, the worldwide lockdown eased, leading to increased demand for crude as consumption of petroleum products, including petrol and diesel, increased. OPEC did not increase production to meet this demand, which also led to higher crude prices. Requests were made to OPEC to reduce production and increase production to meet demand, to which OPEC did not seem to bow. For this reason, countries including USA, India, China had to take this extraordinary step.
India’s Daily Consumption 4.8 Million Barrels
India has decided to release 5 million barrels of crude from its reserve stock, which equates to the country’s daily oil consumption of 4.8 million barrels. According to sources, the stock will be released in the next 7-10 days.
The United States has said in a statement
that it would not allow international prices to fall unless OPEC countries increase crude production. In this regard, OPEC countries were requested to increase production, which they refused. The US later urged OPEC countries, such as India, China and Japan, the largest importers of crude, to release quantities from their reserves.
OPEC countries: Iran, Iraq, Kuwait, Libya, Saudi Arabia, Nigeria, Congo, UAE, Venezuela, Algeria, Angola and Equatorial Guinea.