The agency quoted informed sources that the purchases are aimed at taking advantage of the low oil prices, but two sources said that this Indian measure also represents a sign of solidarity with a campaign aimed at stabilizing the markets.
Although India’s storage capacity is relatively small, purchases are an important sign that the major consuming countries are trying to play a role in rebalancing the oil market, which was destroyed by the Corona virus and the OPEC + alliance failing to agree to cut production.
The New Delhi move appears to be part of a broad response earlier called by the G20 to stop the oil price crash.
The head of the International Energy Agency, Fatih Birol, encouraged oil importers, who have available storage capacity, to take advantage of lower prices and to absorb additional barrels from the market.
The Indian government may request payment facilities from Saudi Arabia and the United Arab Emirates, i.e. to pay the price of the oil, which will be purchased, at a later time.
According to “Bloomberg” agency, India has an additional storage capacity of about 15 million barrels. Officials say that India is seeking to buy about 5.5 million barrels from the UAE and 9.2 million barrels from Saudi Arabia, and some quantities from Iraq.
The OPEC + coalition, led by Saudi Arabia and Russia, will hold an emergency meeting tomorrow, Thursday, to formulate a new agreement to support prices. According to some sources, the agreement will include cuts of 10 million barrels per day.