Indian refiners are taking advantage of cheap oil to bulk up its supplies even as every corner of the nation’s onshore storage tanks fills to the brim, according to Oil Minister Dharmendra Pradhan. After completely filling the 25 million tonnes of oil storage capacity at refineries and pipelines, refiners are now storing 7 million tonnes in tankers at the sea.
Oil has slumped due to a combination of collapsing consumption from the coronavirus outbreak and a short-lived price war between Saudi Arabia and Russia that forced other producers to slash prices. The decline in demand has led to a swelling glut that’s quickly found its way to onshore tanks across the globe, leaving everyone from traders to refiners seeking alternatives such as floating storage.
“It is uncommon to see state-owned refiners in India put crude in floating storage, but they seem to have run out of storage options due to the sharp cutback in crude runs like never seen before,” said Senthil Kumaran, an oil markets consultant at Facts Global Energy.
India, the world’s third-biggest oil importer, buys 80% of its oil requirements from overseas markets. While Prime Minister Narendra Modi has extended India’s lockdown until May 17, some industries and agriculture as well as goods transport have been allowed to restart.