New Delhi: India will release 5 million barrels of crude oil from its emergency stockpile in tandem with the US, China, Japan, South Korea and the UK to rein in international oil prices, the government announced on Tuesday.
This is the first time ever that India, which has stored 5.33 million tonnes or about 38 million barrels of crude oil in underground caverns at three locations on the east and west coast, is releasing stocks to cool down prices.
The US, in turn, will release 50 million barrels from its strategic reserves while China has said it is working on the quantum.
The decision to collectively discharge crude reserves, after OPEC+ ignored calls to significantly boost production, marks a diplomatic win for the US and a challenge to the tenacious hold that Saudi Arabia, Russia and other OPEC producers have on the market.
But the move is not without hazard. OPEC+ officials have warned they're likely to retaliate by cancelling plans to boost their own production, thereby neutralising the addition of stockpiled oil into the market. The standoff has set the stage for a frantic tussle for the control of global energy market.
While the Indian statement did not give the date of release, an official privy to the matter said the stock could be released as early as in 7-10 days. The release could impact domestic prices.
Giving the rationale behind its decision, the Petroleum Ministry said that India strongly believes that the pricing of liquid hydrocarbons should be "reasonable, responsible and be determined by market forces".
Oil Minister Hardeep Singh Puri had said in Dubai last week that high prices will undermine global economic recovery. India is the world's third-largest oil consumer and importing nation and has been severely impacted by the relentless rise in international oil prices.
OPEC and other ally producers -- including Russia, known collectively as OPEC+ -- have been adding around 4,00,000 barrels per day to the market on a monthly basis, which many say is as not sufficient to cool prices that had been rising as demand returns to pre-pandemic levels.
Brent crude is trading at USD 79.24 per barrel.
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