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Is India Going To Store Crude Oil in the USA? Is This The Right Decision?

India wants that the crude oil which has become very cheap today, we should store it in the USA for purchase because the capacity to store it in India is full today. Dharmendra Pradhan, who is the Minister of India Oil and Petroleum, has said that India is in talks with the USA that we want to store cheap oil.

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About one or two months ago, the prices of crude oil have crashed but why India could not take advantage of it. In April 2020, Brent crude money had gone down to less than $ 24, once negative was reached in many parts of the world and now oil recovery is going on in May 2020.

Now, if you look at the oil price, going up the barrel at $ 30 slowly, Donald Trump is very happy with this, his tweet on May 18 is ‘Oil Energy is back’ because the USA is a big seller of crude oil. But it is not that there is no opportunity for India here still, experts believe that oil will not go to the barrel mark at $ 50 very soon.

If oil prices remain below $ 50 a barrel, India can save $ 22 billion this year. If less than $ 35 worth of oil comes, we will save $ 30 billion.

But a very unfortunate problem for India is that we have money, we want to buy oil. But for storing oil, which is our strategic petroleum reserve, it has become full because the size of our strategic petroleum reserve is very low.

Here we can only store around 39 million barrels, which is very less when compared to the rest of the world. USA stock can initiate 730 million barrels, China can store 550 million barrels, Japan can also store 528 million barrels, even in South Korea, it can store around 214 million barrels.

No one has ever focused on the storage capacity of India, whether conservative government NDA or UPA and finally when we have a golden opportunity, we cannot buy oil and keep it in our country.

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There is a guideline for storing crude oil, you store it properly and the biggest thing is that we are storing these oils for rainy days. We are assuming that in the coming time some natural disaster has occurred or the war has started, at that time some oil should be stored with the country, for that we are collecting it.

So, if we can store this oil in a very safe and secure place, then only it will be beneficial. The current situation is that the prices of oil are still at a very low rate, less than $ 50, India’s storage capacity is full. India is now looking at the USA side, in the USA, we can store our oil and this plan of India is not very unique, Australia has already done this.

 Australia had a similar problem with its oil storage capacity. Then it entered into an agreement with the USA inside which they would store millions of crudes in the USA in the ‘USA Strategic Petroleum Reserve’.

The USA is a superpower, but renting land there and storing oil there will charge that much money. Details of this agreement of Australia are not yet available. The agreement that has to be reached with India is still at a negotiation stage, details of which we will come to know in the coming time.

But let’s assume that crude oil we buy a barrel at 35 dollars, which is the cost of storing it at $ 7-8 a barrel, which is much higher than we are estimating even then India is in profit. Even then we are getting crude oil to be stored for less than $ 50 and it is 7-8 dollars. We have estimated it in the worst case, it is likely that it will be much lower than the cost of storing oil.

store-crude-oil-in usa
Photo by Loïc Manegarium from Pexels

There are many advantages to making storage in the USA. The USA is the most powerful country in the world, so if there is a war, it is one of the safest countries in the world. India has improved a lot with regard to the USA and already Australia is doing all this, so the two countries of the quad group will be storing oil in the USA.

Japan does not need,  Japan can store in their country, but one downfall of storing in the USA is that if the situation in the world deteriorates very quickly, the world war moves very fast which we believe It may be so, it will be a difficult task to take your oil back from the USA to our country at such a time, it will take time, it is a downfall, we are talking about a bad situation.

India can also try to store oil in the rest of the country in Asia, in which Japan can be a very good competitor, but the problem is that Japan does not produce oil. The advantage of the USA is that the USA produces oil from there, you buy oil and keep it in their country.

The issue of Japan is that you will buy oil from the USA or Saudi Arabia and then take it to Japan. If you store it there, then the additional cost can increase to a great extent. So, there are plenty of options in front of India, but the USA is the best option for oil storage.



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