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India is increasing strategic oil reserves through ISPRL due to possible rise in oil prices. Supply from big oil producer groups is decreasing and America is imposing sanctions on big Russian companies Rosneft and Lukoil. In such a situation, there is a plan to create stores at two new places in the country.
India is going to strengthen its oil reserves because oil prices may increase soon. In June, crude oil had reached $76 per barrel. Now there is a possibility of new turmoil in the global oil market. Supply from big oil producer groups is decreasing and America is imposing sanctions on big Russian companies Rosneft and Lukoil. In such a situation, India is preparing to further strengthen its energy saving.
In May, the price of oil was at a four-year low of $60 per barrel. It went up in June. Brent crude is currently trading below $65 per barrel. If prices are low, India wants to take advantage of the opportunity to fill and increase its strategic petroleum reserves.
Preparation to create two more oil reserves in India
According to Mint report, two sources have given this information. One person has said that the prices are low now, hence efforts are being made to increase the oil reserves so that energy security is maintained. There is no worry about oil availability but prices may increase further. Another person said that in the last few months, the government and Indian Strategic Petroleum Reserves Limited i.e. ISPRL are busy accelerating purchases. It has been said in the report of a committee of Parliament that till October 2024, India’s reserve capacity is 5.3 million tonnes but only 3.6 million tonnes of oil is filled in the underground caverns. Currently, oil is stored at three places in India. There are plans to build two more new locations which will more than double the stores.
Oil prices may rise
Petroleum Ministry and ISPRL have not given any information on this at present. Former MD and CEO of ISPRL HPS Ahuja said that strategic reserves are useful in any major geopolitical tension. These are filled when the price goes down. To speed up procurement, government oil companies can buy more oil from ISPRL. ISPRL is a government company which buys and holds oil. The decision is taken by a powerful government committee. Government oil companies help in purchasing and the government gives the money. Prashant Vashishtha, senior vice president of rating agency ICRA, said that due to the ban on Russian companies from November 21, the supply will reduce and prices will go up. Already the prices are increasing slightly. There used to be a discount on Russian oil, now global prices will be affected due to reduced supply.
Experts believe that oil will soon become expensive. The first reason why buyers including Indian refineries will buy less Russian oil from November 21 is because of US sanctions. This will reduce the effective supply in the market. The second reason is the decision of OPEC Plus. The group announced to increase production by 137,000 barrels per day for December but has stopped the production increase from January to March 2026. OPEC’s statement on November 2 said that due to weather, eight countries have stopped the increase in January, February and March. Due to this, supply will become tighter and prices may rise.
