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India has decided to join the global alliance of major oil consuming countries by agreeing to release oil from its strategic oil reserve to address the supply constraint that has kept crude prices high.

Accordingly, the country has agreed to release 5 million barrels of crude oil from its strategic petroleum reserves, a government statement said on Tuesday.

India has built strategic petroleum reserves with a capacity to hold 5.33 million metric tonnes (MMT) or 38 million barrels of crude at three locations -- Vishakhapatnam, Mangaluru and Padur (TN). Over 12 per cent of crude stored in the strategic reserves will be released.

The government has timed the release of oil from its strategic reserves in parallel and in consultation with other major global energy consumers, including the US, China, Japan and the Republic of Korea.

India strongly believes that the pricing of liquid hydrocarbons should be reasonable, responsible and be determined by market forces. India has repeatedly expressed concern at supply of oil being artificially adjusted below demand levels by the oil producing countries, leading to rising prices and negative attendant consequences, a government statement said, justifying the decision to tap strategic reserves.

In a bid to control inflationary pressures, the government had reduced central excise duty on petrol and diesel by Rs 5 and Rs 10, respectively, on November 3, 2021. It was followed by reduction in VAT on fuel by many state governments.

The release of strategic oil is also expected to address the supply constraints being faced in the global oil market with rising demand, as economic activity picks up pace post the latest wave of Coronavirus.

Global crude prices have remained firm at around $80 a barrel and had risen over $85 a barrel last month as oil cartel OPEC showed reluctance to step up production to support demand, and agreed on only measured steps to increase production over the next few months.