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New Delhi / Singapore: According to Oil Minister Dharmendra Pradhan, Indian refineries are taking advantage of cheap oil to increase their supplies, even as every corner of the nation’s onshore storage tanks is filled to the brim.
State and private processors now have seven million tons, equivalent to more than 50 million barrels, on board tankers at sea, the minister said in a Facebook post. Refiners are doing so in the midst of a collapse in oil prices that saw the world’s leading benchmark lose more than 60% of its value this year and the Western US Intermediate. USA It fell into negative territory.
India’s use of what is known as floating storage occurs when all of its onshore storage options are exhausted. The country’s 25 million tons of crude and fuel storage capacity in refineries, pipelines and inland warehouses are full, in part due to lower demand, Pradhan said. Even the nation’s strategic reserve tanks are also full, he added.
Oil has plummeted due to a combination of collapse in consumption of the coronavirus outbreak and a short-lived price war between Saudi Arabia and Russia that forced other producers to cut prices. Declining demand has led to increased inflation that has quickly reached onshore tanks worldwide, leaving everyone from merchants to refineries to looking for alternatives like floating storage.
“It is rare to see state-run refineries in India putting crude oil into floating storage, but it appears that they have run out of storage options due to sharp cuts in crude operations like never seen before,” said Senthil Kumaran, consultant to oil markets. at Facts Global Energy.
The country’s demand for oil products in April decreased approximately 70% from the previous year, Pradhan said. Just over a week ago, Bloomberg reported that Indian oil tanks were 95% full as refineries quickly pumped fuel into the spot market and reduced processing rates across the country.
India is the world’s third largest consumer of oil and imports more than 80% of its crude, which is generally the largest expense on its commercial bill. While Prime Minister Narendra Modi has extended the closure of India until May 17, some industries and agriculture, as well as freight, have been able to restart. – Bloomberg
Also read: Loss of India’s oil revenue in the closure exceeds Rs 40 billion
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