Due to soaring oil prices, US requests India cooperation... 5 million barrels of reserve oil expected to be released

Indian Media, Senior Government Officials Mention
OPEC Rejects Request for Production Increase

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Cha Min-young] As the United States requested cooperation from India to stabilize international oil prices, there are expectations that the Indian government will release 5 million barrels of its oil reserves. With the U.S. hastening cooperation requests to major importers, oil prices, which surged last month, have been stabilizing this month.

A senior Indian government official told India’s PTI news agency on the 23rd, "To stabilize (international) oil prices, we plan to release 5 million barrels of crude oil from emergency reserves in cooperation with major consumers such as the U.S. and Japan," adding, "The release could begin within 7 to 10 days, and further releases are also under consideration."

The released reserves are expected to be sold to Hindustan Petroleum Corporation Limited (HPCL), which is connected to storage facilities and pipelines. Earlier that day, another senior Indian government official, speaking on condition of anonymity, told PTI, "We have started work related to the strategic reserve release measure," and said they are in contact with other major consumers to cooperate on this measure.

The U.S. government has requested major consumers such as South Korea, Japan, China, and India to release reserves to curb the global surge in oil prices. Bloomberg also reported the previous day that U.S. President Joe Biden is expected to announce the release of more than 35 million barrels of reserves as early as today.

Along with China, Japan, and South Korea, India, one of the major oil importers, is known to have stored 38 million barrels of crude oil in three storage facilities in the east and west. According to the Indian Economic Times, this corresponds to about nine days of domestic demand before the COVID-19 pandemic. Major oil-producing countries sharply reduced production when global energy demand plummeted during the COVID-19 outbreak and have not returned production to previous levels since.

Despite the surge in international oil prices and U.S. demands for increased production, oil-producing countries such as OPEC have not complied. Jake Sullivan, the White House National Security Advisor and a key figure in the Biden administration’s foreign policy, went to Riyadh, the capital of Saudi Arabia, to request increased production, but OPEC+ decided on the 4th of this month to maintain its previous production increase plan.

Following the U.S. strategic reserve release move, international oil prices have recently stabilized. Both West Texas Intermediate (WTI) and Brent crude oil surged above $80 last month but have recently been trading in the mid-to-high $70 range.