Representative photo of oil storage tanks
New Delhi/Washington D.C.: Expressing concern at supply of oil being artificially adjusted below demand levels by oil producing countries, leading to rising prices and negative attendant consequences, India today decided to release 5 million barrels of crude oil from its Strategic Petroleum Reserves.
This release will happen in parallel and in consultation with other major global energy consumers including the USA, China, Japan and South Korea.
“India strongly believes that the pricing of liquid hydrocarbons should be reasonable, responsible and be determined by market forces,” the Ministry of Petroleum & Natural Gas stated here today. It further said that the Prime Minister has been consistently reviewing the high petroleum/diesel prices domestically.
In a bid to control inflationary pressures, Government of India had reduced the ‘central excise duty’ on petrol and diesel by Rs. 5 and Rs. 10 respectively on November 3, 2021. It was followed by reduction in VAT on fuel by many state governments.
“These difficult steps, despite the high fiscal burden on the Government, were taken in order to provide relief to citizens,” the Ministry asserted.
Meanwhile, the White House also today announced that the US Department of Energy will make available a release of 50 million barrels of oil from its Strategic Petroleum Reserve to lower prices for Americans and address the mismatch between demand exiting the pandemic and supply.
“The increase in gas prices has occurred because global oil supply has not kept pace with global oil demand as the economy has recovered from the pandemic and as countries and companies have held back on supplying oil, and because the declines in oil prices that we have seen have not translated into lower prices at the pump. The President is taking action on both fronts and is committed to using every tool as needed,” the White House stated.
The US President, Joe Biden, had been working with countries around the world to address the supply challenges as the world exits the pandemic. He discussed it in conversations with other leaders, and the White House stated that as a result of the diplomatic efforts, this release will be taken in parallel with other major energy-consuming nations, including China, India, Japan, the Republic of Korea, and the United Kingdom.
“This is the first time we have done something like this in parallel with other major energy-consuming nations,” the statement said.
It further asserted that this announcement culminated weeks of consultations with countries around the world. And over the last several weeks, as reports of this work became public, oil prices are down nearly 10 percent. And the release announced today will begin to move barrels of oil to the market as early as mid- to late-December, depending on market take-up.
– global bihari bureau
