India has signed a preliminary agreement with the US for cooperation in the field of strategic petroleum reserves. India is now also looking at the possibility of storing crude oil in the US emergency stockpile.
This is a major decision by the Prime Minster Narendra Modi led NDA government considering the volatile situation of the oil market and the rather uncertain state of geo-politics that could have a drastic impact on the availability and supply of oil.
Ever since the US imposed sanctions on Iranian oil imports, India has been working consistently towards reducing its dependence on Iranian oil and is looking towards other suppliers like the Middle East and the US.
The government’s decision to consider storing oil in the strategic crude oil reserves of US is a major decision in terms of effectively fulfilling demands of country’s rising fuel requirements while keeping domestic oil prices in check.
The US has largest capacity in the world when it comes to emergency crude oil reserves. So for India, this service could be very effective in an emergency situation. And with the coronavirus pandemic, increasing US China rivalry, etc we are already living in a emergency like situation. So from that perspective, the decision is rather timely.
India’s decision to store oil in the US crude oil reserves has to be looked at in the context of deepening strategic cooperation between India and the US. After the coronavirus pandemic, the cooperation between the two economies has stepped up considerably as India left no stone unturned in ensuring timely and adequate supply of hydroxychloroquine to the US.
The US has emerged as India’s 6th largest oil supplier since the first US crude shipment reached Paradip in Odisha in October 2017.
