As crude oil prices hover around 80 dollars per barrel, the end-consumer of gasoline, petrol, and diesel is feeling the pain at the pump. Most countries are also feeling the pinch of inflation.
India, along with the US, UK, Japan, China, and South Korea, will tap into its crude strategic oil reserves to offset the continuing price hike in the commodity.
How much crude oil does India have, and would it be pragmatic to touch what is meant to be a strategic reserve? Can other countries risk using their reserves? Let us see how each country fares on this front.
India
If you don’t count the EU as a single entity, then India is the world’s third-largest oil importer, after China and the US.
India stores about 5.33 million tonnes of crude oil, equalling 38 million barrels.
Out of these 38 million barrels, India has decided to release 5 million barrels.
So, the country will release about 12-13 percent of its emergency reserves.
While tapping a strategic reserve might sound unsafe, what is to be noted here is that crude oil production hasn’t stopped, and it is very much available in the market if a country, including India, wishes to buy.
The current measure aims to relieve the burden on the economies that are picking up after the coronavirus pandemic.
India will begin releasing these reserves in about a week.
The US and the UK
President Biden had recently written to the Federal Trade Commission asking them to see if any oil company is resorting to malpractice at the pump.
The President has now asked Japan, South Korea, and other countries to join the US in tapping the crude reserves, and they obliged.
The US, which has a huge reserve of 600 million barrels, is about to use 50 million.
So, the US will use around 8 percent of its strategic oil reserves by December.
The UK government will have its oil firms release 1.5 million barrels of oil.
Japan
Japan will use its crude oil almost on par with India. It will release 4.2 million barrels into the market.
In Japan, the law mandates that crude oil reserves last up to 90 days.
Japan’s crude oil reserves are equal to 280 million barrels. This much cater to the domestic demand for 145 days, well over what is required by the law.
South Korea
South Korea will release crude oil from its strategic petroleum reserve.
The East Asian nation has a reserve of 96 million barrels. The quantity of its release is yet to be decided.
China
Chinese media estimated their country’s crude oil reserves to be around 280 million barrels by 2017. The Chinese government, open to the US proposal, is deliberating on the details.