As A Consumer Of Oil In India, You Must Know About Strategic Oil Reserves! So What Is It?

Factually speaking, any line of sentence that carries the phrase “strategic” does sound important and is usually is, “important.” A strategic master plan. A mid-game strategy. That perfect strategic master plan for hiring the right kind executives during recession. So much strategy, so much rational and critical thinking! How does one ignore the term strategy, after all? Right?

Truth certainly is that strategy and oil aren’t too hugely unaffiliated words and are, often used in the same breath of space and time. Take India for example and what one of the world’s most fastest developing economies is doing toward its strategic oil reserves (at the moment).

Isn’t it?

Makes perfect sense to understand what strategic oil reserves are? Every country, for the lack of better expression, utilizes or at least, tries to make the most economic usage of its oil. While some that is used, gets to assist the economy and its players in a plethora of ways, there’s also some that isn’t used at all. And the latter is for a reason.

It’s stocked. Safeguarded. Kept unused only so it can be utilized when desperately needed. However, where India and its stock of oil is concerned then time has come to reflect on an important decision was taken as of Tuesday, i.e., November 23, 2021.

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So what was the decision all about and just who all got affected by it? For starters, those who got affected and are still to get affected by this big key decision are all of us who are consumers of fuel, such as diesel and petrol.

But first up the decision itself!

So at the start of the week, it was decided that the country known for its massive oil exploration programs is going to release no fewer than 5 million barrels of crude oil from its strategic reserves. But this decision, strange or much too sudden that it may have seemed, carried the nod of approval from close allies with whom India discusses intricate and serious business-relating decisions.

Therefore, countries like the United States of America, Japan, and China had all been informed by the country about its impending decision. One of the reasons behind such a massive decision was recently taken by India, it is being said, was at the behest of revisiting a key facet that has governed India’s oil trade. Now how is that?

Apparently, India has always been a huge importer of oil from the western countries. Of the total requirement of imports in India, and this is speaking of the previous year, the overall value of oil imports in the country (during the FY1) as on 2020, was somewhere around 85 per cent. If that does not tell us of how dependant a country we still are on this major product to the remainder of the world , then are they being held next.

Meanwhile, there’s a lot happening on the other side of the planet where it comes to oil. High oil prices impact raw material costs for businesses and affect competitiveness as some petrochemicals refined from crude oil are the basic building blocks in a host of industries. Besides, higher prices forced the government to cut taxes on petrol and diesel.

Perhaps in order to initiate some change and extend more balance to the current situation of strategic oil would one reckon India may have taken the decision it did. Right?