India is looking to buy cheap oil from the US and store the crude there only as its own storages are brimming to capacity.

“We are exploring whether we can store some of our investment in a different country. We are looking at the US if we can store some of the low-priced oil,” oil minister Dharmendra Pradhan told a television channel.

The plan could be similar to the one of Australia, which last month said it would build up an emergency reserve in the US.

India has already filled up its 5.33 million tonnes (mt) of strategic storage and parked up to nine million tonnes on ships in different parts of the world.

Oil prices have dropped more than 40 per cent in 2020 but picked up in the past few weeks partly because of efforts by the Organisation of the Petroleum Exporting Countries and their allies to reduce supply.

“India has 5.3mt of strategic storage capacity. Our companies also have 9mt of floating oil in their contracts. We have booked them, we have purchased them,” Pradhan said.

The storages are in three sites in South India: Visakhapatnam at 1.33mt, Mangalore at 1.5mt and Padur at 2.5mt, equivalent to 9.5 days of ner imports.

In addition, the NDA government has approved the construction of an additional 6.5mt facility at Chandikhol (4 mt) in Odisha and Padur (another 2.5 mt) in Karnataka.

“Apart from that, with our domestic online capacity in crude oil or products we have storage of around 25 million metric tons. Put together, we have nearly 38 million metric tons of product and crude oil storage facilities. This is around 18 per cent of our annual requirement of energy. This is the maximum capacity we could hold and we are holding that,' Pradhan said.

India's fuel demand nearly halved in April to its lowest level since 2007 as a nationwide lockdown and travel curbs to combat the spread of the coronavirus eroded economic activity.

So far in May India's petrol and diesel demand is about 60 percent-65 percent of what it was in the same month last year and in June fuel consumption will return to the same level as June 2019, he said.

During 2019-20 fiscal, India’s crude oil imports were valued lower at $102 billion due to lower prices in the global market. India imports nearly 85 per cent of its crude oil demand, running into nearly 230 million tonnes.