India to buy Middle Eastern crude for strategic reserves

NEWDELHI: India, the world’s third biggest oil consumer, is set to snap up millions of barrels of Middle East crude for its strategic reserves, signaling its support for global efforts to rescue the energy market.

The purchases are aimed at taking advantage of low prices, according to officials with knowledge of the matter. But two of them said they’re also a signal of solidarity for the campaign to stabilise markets after oil minister Dharmendra Pradhan spoke with his US and Saudi Arabian counterparts and the head of the International Energy Agency.

While India’s storage capacity is relatively small, the purchases are an important sign that major consuming countries are trying to play their part in rebalancing a market that’s been pummeled by the coronavirus. China said earlier this month it would start buying up oil for its emergency reserves.

New Delhi’s move appears to be part of a broader G-20 response to the collapse in oil prices. Fatih Birol, the head of the IEA, has encouraged oil importers with available storage to take advantage of low prices to snap barrels. “Oil consumers can help by filling up their strategic petroleum reserves,“Birol said in an interview last week.

A spokesperson at India’s oil ministry declined to comment.

Major oil producers led by Saudi Arabia and Russia are currently trying to stitch together a deal to call off their price war and cut worldwide oil output by around 10 million barrels a day ahead of a meeting of the OPEC+ alliance and other producers on Thursday. Minister Pradhan is also set to take part in a meeting of G-20 energy ministers the following day.