India’s move to commercialise its strategic crude oil reserves is another sign that major Asian importers are taking steps to mitigate the high prices caused by the OPEC+ group’s output cuts.
India, the second-biggest crude importer in Asia behind China, aims to commercialise half of its strategic petroleum reserve (SPR), Reuters reported on July 22 citing two government sources with knowledge of the plan.
While the commercialisation of the SPR, currently home to about 36.5 million barrels of crude or about 5 million tonnes, is aimed at raising funds to build more storage tanks, it also allows refiners to access cheaper oil from storage when prices are high and buy it back when prices fall again.
Indian Strategic Petroleum Reserves, which oversees the SPR, will be allowed to sell 1 million tonnes of crude to local buyers, while private companies leasing storage will be allowed to re-export 1.5 million tonnes of oil if Indian firms don’t want it.
Indian officials have expressed concern this year as crude prices rallied strongly amid moves by the producer group OPEC+ to cut as much as 7 million barrels per day (bpd) of output.