India signals readiness to release more oil reserves

Last month, India said it was ready to release additional crude from its national stock in support of efforts by other major oil importers to cushion the rise in global prices.

The minister indicated that the country could issue more than the national stock if necessary. Teli said in November the federal government had joined other major consumers in releasing 5 million barrels of oil from its strategic petroleum reserves to control inflationary pressures.

Earlier, Reuters reported that, to reduce import costs for companies, India is considering a Russian offer to sell its crude oil and other commodities at a discount.

The rise in crude oil prices may further push inflation in the coming months. Oil prices have skyrocketed since Russia’s invasion of Ukraine. In March alone, they have increased by about 35% – which will likely drive fuel, transport and other related components of inflation in March.

Petrol prices at fuel stations, where Indians will feel the impact most sharply from higher crude oil prices, have barely moved up, but are set to rise in the coming weeks.

Recently, RBI Deputy Governor Michael Patra said that the central bank will revisit India’s GDP growth and inflation projections in the upcoming monetary policy meeting.

Earlier, Union Finance Minister Nirmala Sitharaman had expressed concern over rising crude oil prices due to Ukraine crisis and indicated that the central government is looking at tapping alternative sources.

Noting that India imports more than 85% of its crude oil needs, she said when oil prices rise, it is a matter of concern and “now we have to see how it happens”. He said that the oil marketing companies fix the price of the pump on the basis of 15 days average.