In a bid to address market anomalies, boost tax revenue and help domestic crude oil manufacturing companies get better prices for crude, the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, on Wednesday approved Approved the control of the sale of crude oil. Oil in the meeting held through video conferencing.
Union Minister Anurag Thakur announced the development after the cabinet meeting. Thakur said the decision would be implemented from October this year.
This allows companies to sell their crude oil To any private company in the domestic market along with government companies.
This comes against the backdrop of India producing historically low quantities of crude oil over the decades.
India’s domestic crude oil production continues to decline. In FY22, production declined to 28.4 MMT, the lowest in two decades. Production in 2021-22 represents a decline of 11.8% from 32.2 MT in FY95, adding to the economy’s vulnerability to skyrocketing global oil prices.
Despite being the third largest consumer of oil, the country is dependent on imports to meet 85% of its needs.
In FY22, the country’s crude oil import bill increased to $120.4 billion with the rise in crude oil prices.
Excessive dependence on imports has increased India’s crude oil import bill and widened the trade deficit. State-owned ONGC, which accounts for a major chunk of domestic crude oil production, has seen a steady decline in its output.
Meanwhile, crude oil prices rose on Wednesday 30 to Strong spot demand led participants to widen their positions to 8,842 per barrel.
Crude oil for July delivery extended till trading in Multi Commodity Exchange at 30 or 0.34% 8,842 per barrel in 7,722 lots.
Market analysts said increasing positions by participants kept crude oil prices up in futures trade.
Globally, West Texas Intermediate crude was trading 0.11% lower at $111.64 a barrel and Brent crude was down 0.25% at $117.68 a barrel.