The Indian government has already started shoring up its strategic petroleum reserves after crude prices crashed to historic lows late on Monday night.
India's crude basket is calculated majorly on Oman & Dubai average prices and Brent (dated) price in the ratio of 74.5:24.5. In the month of March, India saw the average price of crude at $33.36 per barrel as against $54.63 per barrel in the month of February.
During the G20 Extraordinary Energy Ministers' virtual meeting on April 10, Petroleum and Natural Gas Minister Dharmendra Pradhan emphasised that India will remain a global energy demand center and that the government will put in all efforts to fill its petroleum reserves
India has a petroleum reserve capacity of 5.33 MT as on date and has filled up 56 percent of it from the contracted supply of crude from oil marketing companies. On April 12, Indian Oil started diverting 1 million barrels of its crude to Mangalore based strategic petroleum reserves.
India Strategic Petroleum Reserves (ISPR), which manages the stocking, expects to fill up the 5.33 MT capacity to 100 percent by May 15 and also expects the last few clearances soon for the starting of phase two of expansion to 6.5 MT. Consumption for petroleum products in FY20 March for India was at a 10 year low and it was down 18 percent compared to FY19 March.
"Oil marketing companies have been asked to fill up strategic petroleum reserves when the prices started coming down, the payment will be done by the government of India at a later stage. It’s a golden opportunity for India to fill up its reserves as prices around $19-20 per barrel. Even though rupee has depreciated it will have a marginal impact" said an oil expert.
It is noteworthy that the average crude import price for Indian basket was at a high of $111.89 per barrel in FY12 and in FY19 it was around $69.88 per barrel.