The union government of India has decided to hit the Strategic Petroleum of the country for the first time, hence the prices for petrol and diesel can drop marginally for common Indians. The center is going to release 5 million (50 lakh) barrels of crude oil from its Strategic Petroleum, which is the country’s fuel reserve to be used for emergencies. Recently, the union government already reduced petrol and diesel prices by Rs. 5 and Rs. 10, respectively, now consumers can expect another price cut further.
The Ministry of Petroleum and Natural Gas of India took the decision as a part of a global consultation. Countries like the UK, USA, India, China, Japan, and South Korea are going to release the respective countries’ Strategic Petroleum too, as the oil prices have surged much significantly in the recent period, while the production did not match up. USA and India have been quite concerned about the surging oil prices and pleaded to the OPEC to increase productions that will reduce the oil prices. However, OPEC ignored it, and the major oil consumer countries decided to release their Strategic Petroleum.
The decision has been taken yesterday by Hardeep Singh Puri, the Minister of Petroleum and Natural Gas of India as he had a meeting with the top ministry and officials of oil marketing companies. In an official statement, the ministry said, “India has repeatedly expressed concern at the supply of oil being artificially adjusted below demand levels by oil-producing countries, leading to rising prices and negative attendant consequences.”
Inflation and crude oil price: impact on Strategic Petroleum
Importantly, the price of oil plays one of the most significant roles in the inflation measurement and price index. Recently, in the USA, the headline inflation reached 6.2% and the country’s monetary policymakers are struggling to control the rate. So, the government has decided to release their strategic petroleum reserves, which are expected to ease the crude oil prices. Eventually, that can reduce the rising inflation rate in the USA. So, the country, reached out to some major economies including India to take up a similar policy regarding their strategic petroleum reserves. India has accepted the policy; importantly India is not also standing in a very good position on the inflation measures after the pandemic hit.
However, the government’s decision has been published in the backdrop of Assembly elections in multiple states in the next year, and some opposition leaders are arguing that India did not adequately increase its crude oil production in the past few years, thus the country is being obliged to release the Strategic Petroleum.
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Story first published: Wednesday, November 24, 2021, 21:58 [IST]
Original news source Credit: www.goodreturns.in