India says oil producers artificially adjusting oil supply leading to price hike

Rameshwar Teli, Minister of State for Petroleum and Natural Gas, said in a written reply that with the rise in international oil prices pushing retail petrol and diesel rates to record highs, India has removed 50% from its strategic petroleum reserves last month. agreed to release one million barrels of crude. For a question in Rajya Sabha.

This was being done “in consultation and in parallel with other major global energy consumers including the United States, the People’s Republic of China, Japan and the Republic of Korea”, he said. “This step is being taken to control the inflationary pressure and provide relief to the citizens.”

This is the first time that India, which stores 5.33 million tonnes or about 38 million barrels of crude oil in underground caves at three locations on the east and west coast, is releasing stocks for such purposes.

While the US will release 50 million barrels of oil from its strategic petroleum reserves, the stocks to be issued by India are equivalent to a daily oil consumption of about 4.8 million barrels.

“India firmly believes that the pricing of liquid hydrocarbons should be fair, responsible and determined by market forces,” the minister said.

With reference to output quotas set by OPEC and its allies to regulate prices, he said, “India has expressed concern over artificially adjusting oil supply below the demand level by oil producing countries.” , leading to rising prices and negative consequences.”

As per the consumption pattern of 2019-20, the total capacity at Strategic Petroleum Reserves (SPR) facilities installed is estimated to meet the crude oil requirement of around 9.5 days.

Oil Marketing Companies (OMCs) currently have 64.5 days of stock. “Therefore, the total storage capacity of petroleum products is 74 days,” he said.

India is 85 per cent dependent on imports to meet its oil requirements and hence domestic retail rates are in line with benchmark global commodity prices.

He said that the government is taking all corrective measures to safeguard the energy security of the country by ensuring energy justice for all citizens.

And, with domestic retail rates hitting record highs, it reduced central excise duty on petrol and diesel 5 per liter and 10 per liter respectively on November 3, he said.

This was followed by reduction in Value Added Tax (VAT) on fuel by 28 states and union territories.

“The replenishment of strategic petroleum reserves is done taking into account a number of factors including the grade of crude oil and international market conditions,” Teli said.

International crude oil prices are influenced by a number of factors including supply and demand, futures trading, impact of the COVID-19 scenario and geopolitical situation, he said, adding that there is a linear correlation between pricing and any one of these factors in isolation. To add, is uncertain.

India joined other major oil consumers in issuing stocks from the SPR after members of the Organization of the Petroleum Exporting Countries (OPEC) and its allies rejected repeated requests to ramp up their production.

New Delhi has been the most forceful about flexing its muscles as a major oil consumer, cutting shipments from Saudi Arabia by nearly a quarter after OPEC cut production.

Oil Minister Hardeep Singh Puri said in Dubai last month that higher prices would undermine the global economic recovery.

India is the world’s third largest oil consumer and importer and has been seriously affected by the continuous rise in international oil prices.

OPEC and other allied producers, including Russia, known collectively as OPEC, are adding about 400,000 barrels per day to the market on a monthly basis, which many consider not enough to cool prices. Which was increasing as demand. – Epidemic level.

India has stored 1.33 million tonnes at Visakhapatnam in Andhra Pradesh, 1.5 million tonnes at Mangaluru and 2.5 million tonnes at Padur (both in Karnataka).

ADNOC of the United Arab Emirates has leased half of Mangalore’s storage, while the rest is with state-owned MRPL. State-owned firms and the government have stockpiled oil at other facilities.

While the US stocks 727 million barrels, Japan has 175 million barrels of crude and oil products as part of the SPR.

This story has been published without modification in text from a wire agency feed.