Thread on Strategic Reserves: In a dramatic and unprecedented event, the price of crude oil [precisely, the price of the future contract for West Texas crude, expiry 21st Apr] fell to Minus $37.63. 1/n

The reason for this is that, due to the coronavirus pandemic, there is so much unused oil that there's no space to store it. And storing oil costs money. Thus, oil producers had to pay people to get rid of the oil.

So, the US government did the smart thing and bought 75 million barrels of crude oil to store it as part of their Strategic Petroleum Reserves - a physical emergency oil stockpile. This is what India needs to be doing as well.

India has underground salt caverns in which we can store oil for SPR. Only about half of this is full. Now would be the perfect time to fill up the rest. This will give us about 10 days of import cover for oil. [When the May futures expire, it will again see a dip such as this].

In the next phase, India plans to add 12 further days of import cover, in partnership with an oil producing company - ADNOC or Saudi oil. Fast track it now to take advantage of these prices.

India also has partially used oil bunkers in Trincomalee, Sri Lanka. These were WWII bunkers built by the British and is now owned by IOC. We must operationalise and modernise those bunkers and fill it with oil.

Countries such as Oman have large bunkers for storing oil and are leasing the space + providing oil (now, at low prices). Ras Markaz can store 200 million barrels and they're looking for interested countries. India should look into it.

The ISPRL should automatically consider filling up the SPR everytime Brent crude falls to below, say $40 per barrel. Oil will remain important to India's energy security in the near future. We must secure it.

For more on India's SPR, please check out @TakshashilaInst policy document that @thesethist and I worked on: https://takshashila.org.in/takshashila-discussion-document-an-indian-approach-towards-strategic-petroleum-reserves/