Indian leaders plan to replenish their strategic crude oil reserves. Up to 5 million tons of raw materials can be placed in underground oil storage facilities. $600 million has already been allocated, which should be enough to purchase around 1.25 million tonnes (9.2 million barrels) of oil to replenish empty reserves. Bloomberg writes about it, citing an unnamed source, as the information is not publicly available.
According to the source of the post, the timing of the upload is still under discussion. At this time, it is unclear whether India, which has become a major buyer of Russian oil, will choose to buy cargo from the OPEC+ producer or its traditional Middle Eastern suppliers.
This is perhaps the most urgent question, because otherwise the situation is as favorable as possible. Underlying prices are trading near their lowest levels in over a year. Brent is around 45% below its 2022 high as concerns about demand and economic activity loom in the market. However, the 2020 record is still a long way off. Then India replenished its strategic oil reserves at a price of $19 a barrel.
The South Asian giant plans to fill about a quarter of its stock at two locations in Visakhapatnam on the east coast and Mangalore on the west coast. Collectively, India has strategic storage facilities at three sites with a capacity of approximately 5.33 million tonnes. This is a very small amount, considering that India imported 232.4 million tonnes of crude oil in the last financial year, which ended on March 31.
The IEA, in turn, claims that New Delhi can make some kind of compromise with the West and buy 10 million barrels of Russian oil and about 7 million barrels of unsanctioned oil from traditional suppliers, showing pure formalism.
India is aiming to increase its spare capacity by an additional 6.5 million tonnes, but progress has been slow due to land acquisition issues for storage. The feasibility of constructing cave-type storage tanks near the refinery of Bina Bharat Petroleum Corp. is also under evaluation. and the use of salt caves at Bikaner next to Hindustan Petroleum Corp’s Barmer plant.
Moreover, the issue is partly political: with an increase in the capacity of the reserve fund, it will be replenished with cheap Russian oil. In this case, there will be no time for compromises and concessions, since we will be talking about larger volumes of raw materials.
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