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India Moves to Refill Strategic Oil Reserves as Crude Prices Expected to Rise

In a bid to shield itself from potential oil price surges, India has begun refilling its strategic petroleum reserves (SPRs). The decision comes as global crude markets tighten, driven by geopolitical tensions and production cuts from major exporters like Saudi Arabia and Russia.

Why India is Replenishing SPRs Now

As the world’s third-largest oil importer, India depends on foreign crude for over 85% of its energy needs. The country stores emergency oil in underground reserves at Visakhapatnam, Mangaluru, and Padur, with a combined capacity of 5.33 million metric tonnes (MMT)—enough to cover about 9.5 days of demand.

Last year, India took advantage of low oil prices to fill these reserves at discounts. With Brent crude now near $85–$90 per barrel—and analysts predicting further increases—the government is acting preemptively to secure more oil before costs climb higher.

Key Factors Influencing India’s Decision

1. Geopolitical Tensions & Supply Disruptions

• The Russia-Ukraine war and Red Sea shipping attacks have increased market volatility.
• OPEC+ supply cuts, including Saudi Arabia’s extended reduction of 1 million barrels/day until December 2024, are tightening supply.

2. Declining Discounts on Russian Oil

India has benefited from cheaper Russian crude since 2022, but Moscow’s alignment with OPEC+ policies could reduce these discounts.

3. Economic & Strategic Benefits

• Refilling reserves now could save costs if prices surpass $100/barrel later this year.
• India is exploring leasing spare storage to foreign entities for additional revenue.

Long-Term Energy Security Plans

To further bolster its reserves, India is:
– Expanding capacity with a proposed 4 MMT facility in Chandikhol, Odisha (extending reserves to 12 days of demand).
– Encouraging private investments, such as UAE’s Adnoc, in commercial storage.

Impact on Consumers & Economy

A well-stocked SPR helps stabilize fuel prices, a critical factor ahead of elections. However:
– India’s oil demand is growing at 3–4% annually, requiring more than just SPRs to manage volatility.
– Experts recommend boosting renewables and fuel efficiency policies for long-term stability.

Conclusion

India’s move to refill its oil reserves highlights its proactive stance on energy security. While geopolitical and market uncertainties persist, strategic storage expansion and supply diversification remain key priorities.

For real-time updates on global oil markets and India’s energy policies, follow NextMinuteNews.

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