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India—the world’s third-largest oil importer—plans to sell off 5 million barrels of crude from its strategic petroleum reserve (SPR) within a week, and could release more oil at a later stage as part of efforts led by the U.S. to bring oil prices down, Bloomberg reported on Tuesday, citing a source with knowledge of India’s plans.
Earlier this week, India was reportedly ready to join the global efforts of major oil consumers led by the United States to reduce prices.
The United States has asked the top Asian consumers India, Japan, China, and South Korea to release crude from their respective strategic stockpiles after the OPEC+ group ignored repeated calls from consumers—most vocal from the U.S.—to increase the monthly production by more than the 400,000 bpd decided in July.
Japan’s government has confirmed in recent days it was considering a release of crude oil from its strategic reserve in a marked departure from its initial reaction to U.S. President Joe Biden’s idea of a concerted release by several countries.
The 5 million barrels of crude that India is said to consider releasing within a week cannot cover even a day of India’s total petroleum consumption, but it is a move aimed at showing OPEC+ that major oil consumers are unhappy with the high crude oil and gasoline prices.
The OPEC+ group, for its part, warned on Monday the consuming nations mulling over SPR releases that it could respond to a coordinated release by potentially reconsidering plans to continue adding more production each month to meet demand.
“There is a growing risk that OPEC+ responds to an SPR release by pausing planned supply increases. A resurgence of Covid-19 in Europe coupled with a potential release may be reason enough for the group to decide against a production hike of 400Mbbls/d when they meet in early December,” ING strategists Warren Patterson and Wenyu Yao said on Tuesday.
“The prospect of retaliation from OPEC+ does leave the potential for further volatility in oil markets,” they added.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.