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India: Global Energy Demand Centre
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Topic:
General Studies 2:
- Effect of policies and politics of developed and developing countries on India’s interests.
General Studies 3
- Energy
In News: Measures to curb the spread of the coronavirus have destroyed demand for fuel and driven down oil prices, straining budgets of oil producers and hammering the U.S. shale industry which is more vulnerable to low prices due to its higher costs.
The G20 Energy Ministers’ are focussing on ways and means to ensure stable energy markets, which are affected due to demand reduction as result of the COVID-19 pandemic and the ongoing surplus production related matters.
The ‘virtual’ meeting
- The G20 group of leading world economies had called an extraordinary energy ministers’ meeting to discuss OPEC-led plans for a global crude oil production cut accord aimed at shoring up prices that have in the last one month halved.
- The meeting was held via webinar to “foster global dialogue and cooperation to ensure stable energy markets and enable a stronger global economy.
- This is the first time the G20 has specifically convened to address energy issues, showing the depth of concern about the oil crash.
India will continue to remain a global energy demand centre
Minister of Petroleum and Natural Gas and Steel Dharmendra Pradhan has called for a win-win formula that would safeguard interests of global energy suppliers and consumers during the G-20 oil ministers’ virtual conference to stabilise oil markets that have been rocked by the COVID-19 pandemic.
Strategic Reserves: With cheap oil flooding the market and stretching energy storage capacity, India will continue to fill up its strategic petroleum reserves. India currently holds its strategic oil reserves in Vishakhapatnam, Mangaluru and Padur, storing 5.33 million tonnes of crude, which could last for around nine days. According to an earlier agency report, India will spend about $ 670 million to buy oil at around the $30 a barrel, for its strategic reserves, drawn from Saudi Arabia and the United Arab Emirates. Deliveries will start around April-May.
Ongoing energy market fluctuations: Oil prices should remain affordable so that a “consumption-led demand recovery” could help stabilise the oil markets. The minister also lauded efforts by the OPEC+ countries, which also include Russia and others, as an extension of the cartel, to balance the supply-side factors, which is imperative for long-term sustainability.
The conference has decided to establish a task force to advise on the next steps to mitigate the effects of Covid-19 on people’s health and the global economy.
Must Read: Oil in Post COVID-19 world
Connecting the Dots:
- Short note: The ongoing energy market fluctuations
- Explain various factors that causes drop in oil prices.
