Russia is selling crude oil at discounted prices to India at a time when oil marketing companies have started increasing petrol and diesel rates across the country. Meanwhile, the government was closely monitoring global energy markets situation in the backdrop of evolving geopolitical events, Minister of State for Petroleum and Natural Gas Rameswar Teli said.
Teli has said that if required, the government would release the strategic petroleum reserve (SPR) to mitigate market volatility and calm the rise in crude oil prices.
PETROL, DIESEL PRICES
While OMCs paused retail price revision during the period when international oil prices spiked to a 14-year high of USD 139, petrol and diesel prices have been revised 9 times since March 22, totalling a hike of Rs 6.4 per litre till Friday.
- India is dependent on imports to meet 85 per cent of its oil needs. Its major sources of crude oil are Iraq, Saudi Arabia, the UAE, Nigeria and the US.
- Refiners in India, the world’s third biggest oil importer and consumer, have been snapping up Russian oil through spot tenders since the war broke out on February 24, taking advantage of deep discounts as other buyers back away. India has purchased at least 13 million barrels of Russian oil since February 24, compared with nearly 16 million barrels in all of 2021, according to a Reuters report.
- Russia is offering a discount of $35 a barrel to price levels prior to the start of the Ukraine crisis in February, the Reuters report said.
- Indian Oil Corp has a contract with Russian oil company Rosneft that gives India’s top refiner an option to buy up to 2 million tonnes, equivalent to about 15 million barrels, of Urals in 2022, as per the Reuters report.
While OMCs have snapped distressed Russian oil being offered at a deep discount post-Ukraine war, Minister of State for Petroleum and Natural Gas Rameswar Teli said: “less than 1 per cent of total crude oil (is) being imported from Russia in the year 2021-22 (till January).”
“Import of crude oil is carried out by Indian oil and refining companies in the public and private sector from diverse sources, including from sources in Russia, through business-to-business arrangements, based on techno-commercial considerations and domestic requirements,” the Minister said.
INDIA’S OIL RESERVE
- In November 2021, in a bid to control inflationary pressures, India, in consultation and parallel with major energy consumers, agreed to release 5 million barrels from its SPR.
- Teli said India maintains SPR of 5.33 million tonne, or the equivalent of about 9.5 days of crude oil requirements.
- In addition, oil marketing companies (OMCs) currently have a capacity of 64.5 days.
- “Hence, the total storage capacity of crude oil and petroleum products is 74 days,” he said.
INTERNATIONAL OIL PRICES
Brent crude futures slid to $104.63 a barrel on Friday. The US West Texas Intermediate (WTI) crude futures fell to $99.89 a barrel, according to the Reuters report.