India is taking benefits of cheap crude oil by stockpiling its emergency reserves, oil tankers offshore and asking other nations to store oil for India. Historically, India has been buying from OPEC+ nations, but seems to be diversifying by buying oil from US, and even asking it to park oil in its reserves.
Crux of the Matter
India’s Crude Oil Stockpile Strategic crude oil reserves help a country survive short-term supply disruptions in case of any emergency. Currently India has stored oil amounting to 20% of its annual need. As of now India imports nearly 80% of the annual crude oil need. India majorly depends on the gulf countries for oil.
However, as the price of crude oil has fallen due to less demand due to the Coronavirus lockdown, India seems to be taking advantage of it, just like China, by stockpiling 5.33 million tonnes (MT) in strategic storage. Strategic storage facilities in India are located at Visakhapatnam, Mangalore, and Padur (Karnataka). Looking at the increasing annual demand for fuel post lockdown, India is mulling to expand strategic storage to 6.5 MT. Moreover India has also stored around 8.5-9 MT oil on ships across the world.
Strategy to buy US’ Crude US WTI crude oil futures stock traded in negative in April before expiring. Thereafter, it has seen a rise, albeit a slow one due to prolonged lockdown and uncertainty. At a time when WTI oil is cheap, India is planning to park oil from America in its own local facilities as India’s storage facilities are full. Recently Australia has also stockpiled oil in the US.
We are exploring some possibility if we can store some of our investment in a different country … we are exploring the possibility in the USA if we can store some of the low priced oil. Dharmendra Pradhan, Indian Oil Minister
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Morgan Downey is an Irish-born New York-based American commodities trader and acknowledged authority on the financial aspects of the oil industry. Downey has been cited in the press as an expert in oil markets and his 2009 book ‘Oil 101’ was called a “must-read” by a Financial Times blogger.
Exxon Mobil Corporation, doing business as ExxonMobil, is an American multinational oil and gas corporation headquartered in Irving, Texas. One of the world’s largest companies by revenue, ExxonMobil from 1996 to 2017 varied from the first to sixth-largest publicly traded company by market capitalization.
Fossil fuel phase-out is the gradual reduction of the use of fossil fuels to zero use. Current efforts in fossil fuel phase-out involve replacing fossil fuels with alternative energy sources in sectors such as transport, heating, and industry.
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