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26 May, 2020 08:45

India bought so much ultra-cheap American crude, it’s running out of places to store it

India bought so much ultra-cheap American crude, it’s running out of places to store it

Indian Oil Minister Dharmendra Pradhan said the South Asian country is looking at storing some low-priced American crude at US facilities because India’s local storage is full.

He said that the world’s third-biggest oil consumer and importer has already filled its 5.33 million tons of strategic storage and parked up to nine million tons of oil on ships in different parts of the world.

“We are exploring some possibility if we can store some of our investment in a different country... we are exploring the possibility in the USA if we can store some of the low-priced oil,” Pradhan told CNBC.

Last month, Australia said it would build up an emergency oil stockpile initially by buying crude to store in the US Strategic Petroleum Reserve to take advantage of low oil prices.

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Indian refiners have already filled their commercial tanks and pipelines with refined fuel and oil, according to Pradhan. The stored oil and related products amounted to about 20 percent of the nation’s annual needs. India imports more than 80 percent of its oil requirements.

The country plans to build new strategic storage to expand capacity by 6.5 million tons, he said, adding that India is keen to have participation from global investors in building those facilities.

READ MORE: Covid-19 may end India's hopes of becoming world leading economic force, Professor Wolff tells Boom Bust

Fuel demand in India nearly halved in April to its lowest level since 2007 as a nationwide shutdown to combat the spread of Covid-19 has crippled economic activity.

So far in May, India’s petrol and diesel demand is about 60 percent-65 percent of what it was in the same month last year, said Pradhan, noting that in June fuel consumption will return to the same level as June 2019.

For more stories on economy & finance visit RT's business section