The Indian basket of crude oils fell below $37 per barrel on the previous trading day on Wednesday as global prices slid further amid a supply glut, raising visions of the black gold falling to $20 levels.
As per data released by India's petroleum ministry, its crude basket fell below the $40 per barrel mark for the second time in a month on Monday, following a decision by the Organisation of Petroleum Exporting Countries (OPEC) last week to keep producing optimally.
The Indian basket, comprising 73 percent sour-grade Dubai and Oman crudes, and the balance in sweet-grade Brent, plunged to $36.75 on Wednesday for a barrel of nearly 160 litres, as per data compiled by the state-run Petroleum Planning and Analysis Cell.
As per latest OPEC data, its new reference basket of 12 crude oils closed at $34.80 a barrel on Wednesday. With the OPEC strategy designed to choke competition from the American shale gas industry, US light crude dropped on Wednesday to less than $38 a barrel.
The West Texas Intermediate for January delivery moved down 35 cents to settle at $37.16 a barrel on the New York Mercantile Exchange, while Brent crude for January delivery decreased 15 cents to close at $40.11 a barrel on the London ICE Futures Exchange.
Oil prices have been under pressure for several months due to concerns over oversupply, but the slump has deepened in the recent period.
Crude-oil production has remained robust despite the large drop in prices in the last year, as US producers continue to cut costs and OPEC members keep producing at full tilt.
Prices have fallen by more than 50 percent in a little over a year from levels of well over $100 a barrel, provoked by the slowdown in China and other emerging market economies and the end of sanctions against Iran.
Given the low crude oil prices prevailing for some time, India has been moving ahead on creating a dedicated strategic oil reserve.
The Indian Strategic Petroleum Reserves Ltd (ISPRL) has finished constructing a storage facility at Visakhapatnam, which can hold about 9 million barrels. Two more facilities on the west coast - Mangaluru and Padur with 30 million barrels capacity - are expected to be ready soon.
The ISPRL targets construction of another 90 million barrels of capacity across four different centres.