India has bought the first oil for its strategic petroleum reserve (SPR), trade sources said on Monday, marking the start of a round of purchases by the world's fourth-biggest oil consumer to build up emergency stockpiles.
Oil prices have almost halved in the past year due to excess global production, leaving traders looking for any signs of new demand to help absorb the surplus.
The sources said state-refiner Indian Oil Corp bought a 2 million barrel cargo of Iraqi crude from Chinese trader Unipec, which will load in May for shipping to the first stage of India's SPR on the country's east coast.
In addition, state-refiners IOC and Hindustan Petroleum Corp Ltd will buy another three Very Large Crude Carriers between them for the Vizag SPR storage site in Andhra Pradesh.
While the first 8 million barrels for Vizag are relatively small compared with the global market, totaling less than 10 percent of daily demand, India's purchases could ramp up later this year as the country completes construction of the next phase.
Two SPR sites, at Padur and Mangalore on India's west coast, will have a capacity of 29.3 million barrels and are expected to be ready by October
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