The government of india has decided to use crude oil from its reserves to control the rise in crude oil prices.
India is the third-largest importer of crude oil. india will extract 50 lakh barrels of crude oil from its 3.8 crore barrels in reserve.
India has taken this decision after consultations with the united states, japan and South Korea. These countries are putting pressure on oil-producing countries to produce more oil to control the price of petroleum products.
However, the united states has not yet been able to persuade OPEC countries to increase crude oil production.
In such a scenario, the indian media has expressed uncertainty about how effective it would be for india to extract crude oil from vital reserves.
Coordination with the united states and other countries
Indian officials say they plan to extract five lakh barrels of crude oil from reserves. This is equivalent to the amount of petroleum used in a day across the country.
The crude oil will go to Hindustan Petroleum and mangalore Refinery and Petrochemicals Limited (MRPL) as storage depots at Visakhapatnam, mangalore and Badur are directly connected to the refinery through underground pipelines.
Why is this done?
With crude oil prices rising, the government has recently reduced taxes on petrol and diesel, costing india Rs 60,000 crore in revenue.
India clearly believes that market forces must responsibly determine the price of petroleum. Oil-producing countries supply less than they need.
As crude oil prices rise, india will have to spend more on imports. This could increase inflation and widen the trade deficit.
India's decision is a symbolic move
The government's decision is also seen in the indian media as a symbolic move to control petroleum prices. Officials did not expect the decision to lower oil prices.
We are taking small quantities of crude oil from the stockpile. But the significance of this identification is huge.
All major consumer countries are hereby pointing out that they can take action to protect their interests as well as demand from OPEC countries.
