India is releasing 5 million barrels of crude oil from its strategic petroleum reserves.
“India strongly believes that the pricing of liquid hydrocarbons should be reasonable, responsible and be determined by market forces,” the ministry of petroleum and natural gas announced today (Nov. 23). “India has repeatedly expressed concern at supply of oil being artificially adjusted below demand levels by oil producing countries, leading to rising prices and negative attendant consequences.”
Oil will be supplied to refineries located near where the inventories are held, such as those owned by Mangalore Refinery and Petrochemicals and Hindustan Petroleum, Bloomberg reported, citing an anonymous source.
This is the first time ever that India, which stores oil in underground caverns at three locations along the east and west coasts, is releasing reserves. The contribution is sizable—it comprises around 13% of the total 38 million-barrel stockpile India holds. However, it’s also just one day’s worth of oil consumption in India—4.8 million—suggesting that the move is probably more symbolic than anything.
India’s move is part of a coordinated attempt by the world’s top oil consumers to tame prices.
“This culminates weeks of consultations with countries around the world, and we are already seeing the effect of this work on oil prices,” the White House statement says, adding that oil prices are down nearly 10% since reports of these discussions became public.
Together, these countries want to put pressure on oil-producing nations to ramp up oil supply and help bring prices down. However, the move may backfire. Delegates of OPEC+, a consortium of two dozen oil-producing nations, have warned that they will cancel plans to boost their own production, negating any effect of collectively discharging stockpiles.
In the US, Biden is facing a ton of backlash over rising oil prices. In India, prime minister Narendra Modi is battling similar outrage. Earlier this month, India’s central government and various state administrations slashed duties and taxes on petrol and diesel.