The prices of petrol and diesel could see a further drop in the coming days as the Centre has decided to release five million (50 lakh) barrels of crude oil from its Strategic Petroleum Reserves.
The decision was taken after Minister of Petroleum and Natural Gas of India Hardeep Singh Puri held a meeting with top ministry and officials of oil marketing companies in Delhi on Tuesday. The decision was taken likely after the US reached out to India and other major oil consumers to release their strategic petroleum reserves to temper rallying crude oil prices, two people aware of the development told India Today.
The Petroleum Ministry said that India strongly believes that the pricing of liquid hydrocarbons should be "reasonable, responsible and be determined by market forces".
"India has repeatedly expressed concern at the supply of oil being artificially adjusted below demand levels by oil producing countries, leading to rising prices and negative attendant consequences, " the ministry added.
Top sources said that India's positive response to the strategic multinational move could bring positive dividends in the form of further reduction in fuel prices. The Centre had already slashed petrol and diesel rates by Rs 5 and Rs 10, respectively, on November 3.
However, sources said the reduction may not be long term if the major oil producing nations do not rethink on the rising prices of their crude oil Strategic Petroleum Reserves are built by the government for tackling emergency situations.
Last week, Hardeep Singh Puri had said, "Strategic oil reserves were not intended for a situation like that prevails today. It's for force majeure situations like natural calamities and outbreak of hostilities or events that lead to shut down of oil facilities. "
The Centre's decision comes ahead of the Assembly elections in multiple states slated for next year.
The US's request to release strategic reserves came after the Organisation of the Petroleum Exporting Countries (Opec)-plus grouping ignored the pleas by the US and India to boost output to temper prices, which were at a high and hurting economies recovering from the coronavirus pandemic.
The US's efforts to bring together the big oil consuming nations had an impact during the last few days as crude prices slipped below their seven-year highs of $80 a barrel last week.
The US, China, India, Japan and South Korea are the world's largest crude oil consuming nations.
In 2020, India bought crude oil at $19 a barrel to build a 5. 3 million MT of strategic reserves. This had helped India save over $685 million in its crude bill.
As a safeguard, India has been out to build an additional 6. 5 MMT of strategic petroleum reserves while members of the International Energy Agency (IEA) as a practice maintain emergency oil reserves equivalent to at least 90 days of net imports.
The
prices
of petrol and diesel could
see
a
further
drop in the coming days as the
Centre
has decided to release five million (50 lakh) barrels of
crude
oil
from its
Strategic
Petroleum
Reserves.
The decision
was taken
after Minister of
Petroleum
and Natural Gas of India
Hardeep
Singh
Puri
held a meeting with top ministry and officials of
oil
marketing
companies
in Delhi on Tuesday.
The
decision
was taken
likely after the US reached out to India and other major
oil
consumers to release their
strategic
petroleum
reserves
to temper rallying
crude
oil
prices
, two
people
aware of the development
told
India
Today
.
The
Petroleum
Ministry said that India
strongly
believes that the pricing of liquid hydrocarbons should be
"
reasonable, responsible and
be determined
by market forces
"
.
"
India has
repeatedly
expressed concern at the supply of
oil
being
artificially
adjusted below demand levels by
oil
producing countries, leading to rising
prices
and
negative
attendant consequences,
"
the ministry
added
.
Top sources said that India's
positive
response to the
strategic
multinational
move
could bring
positive
dividends in the form of
further
reduction in fuel
prices
. The
Centre
had already slashed petrol and diesel rates by Rs 5 and Rs 10,
respectively
, on November 3.
However
, sources said the reduction may not be long
term
if the major
oil
producing nations do not rethink on the rising
prices
of their
crude
oil
Strategic
Petroleum
Reserves
are built
by the
government
for tackling emergency situations.
Last week,
Hardeep
Singh
Puri
had said,
"
Strategic
oil
reserves
were not intended for a situation like that prevails
today
. It's for force
majeure
situations like natural calamities and outbreak of hostilities or
events
that lead to shut down of
oil
facilities.
"
The
Centre
's decision
comes
ahead of the Assembly elections in multiple states slated for
next
year.
The US's request to release
strategic
reserves
came after the
Organisation
of the
Petroleum
Exporting Countries (
Opec
)-plus grouping
ignored
the pleas by the US and India to boost output to temper
prices
, which were at a high and hurting economies recovering from the coronavirus pandemic.
The
US's efforts to bring together the
big
oil
consuming nations had an impact during the last few days as
crude
prices
slipped below their seven-year highs of $80 a barrel last week.
The
US, China, India, Japan and South Korea are the world's largest
crude
oil
consuming nations.
In 2020, India
bought
crude
oil
at $19 a barrel to build a 5. 3 million MT of
strategic
reserves
. This had
helped
India save over $685 million in its
crude
bill.
As a safeguard, India has been out to build an additional 6. 5 MMT of
strategic
petroleum
reserves
while members of the International Energy Agency (IEA) as a practice maintain emergency
oil
reserves
equivalent to at least 90 days of net imports.