India To Release 5mn Barrels Crude Oil
India plans to release about 5 million barrels of crude oil from its emergency stockpile in tandem with the US, Japan and other major economies to cool prices in an unprecedented, coordinated challenge. This is the first time ever that India which stores 5.33 million tonne or about 38 million barrels of crude oil in underground caverns at three locations on the East and West coast, is releasing stocks for such purposes.
India is the world's third largest oil consumer and importing nation and has been severely impacted by the relentless rise in international oil prices. Since the US move, global oil prices are on the decline. Brent crude was trading at $78.72 per barrel, down from $81.24 a barrel 10-days back. On October 26, it had hit a multi-year high of $86.40. OPEC and other ally producers- including Russia, known collectively as OPEC+ - have been adding around 4,00,000 barrels per day to the market on a monthly basis, which may see as not sufficient to cool prices that had been rising ad demand returns to pre-pandemic levels. The unprecedented effort by Washington to team up with major Asian economies to lower energy prices sends a warning to OPEC and other big producers that they need to address concerns about high crude prices, up from 50 % so far this.
Sources indicated that similar steps should be taken to temper steel and basic raw material prices at international level. The initiative are being taken to ensure that the "transient inflationary impact of rising commodity prices do not turn structural." American consumers and businesses were feeling impact of elevated gas prices at the pump and in their home heating bills... because oil supply has not kept up with demand as the global economy emerges from the pandemic.
Analysts expect OPEC+ to respond to the buyers' challenge when the members of the cartel meat for a monthly review in early December. The market focus has shifted from the release to how OPEC+ will respond to what the White House is calling a 'message to the Saudis.' The threat of a coordinated release, along with new corona virus-related lockdowns in Europe, has knocked the wind out of crude oil's rally. If it comes to the test of wills and capabilities between a handful strategic oil reserves holders that by US and OPEC+, the market would probably bet on the latter prevailing.
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