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Informist, Monday, Mar. 2, 2026

 

By Anand JC

 

NEW DELHI - Crude oil reserves held by state-run Indian Strategic Petroleum Reserves Ltd. and refiners can help cover close to 40-45 days of consumption in case of a disruption in supply of oil due to the ongoing military conflict in West Asia. Operations at the Strait of Hormuz, through which India imports roughly 50% of its crude oil, were affected over the weekend after the US and Israel attacked Iran and the latter closed the Strait of Hormuz.

 

Indian Strategic Petroleum Reserves has around 4.09 million tonnes of crude stock available, which is around 77% of the total storage capacity across three locations. These reserves can help India meet crude oil demand for roughly 5-6 days. However, the total reserves including the stock of crude oil with refiners as well as the stock of petroleum products is much larger.

 

India's crude oil stocks are around 100 million barrels, including strategic reserves, Nikhil Dubey, senior research analyst at Kpler said. "With imports via the Strait of Hormuz averaging roughly 2.5 million barrels per day — about 50% of India's (around) 5 mb/d total crude imports — these combined reserves could theoretically cover close to 40-45 days of imports in a disruption scenario from a crude perspective. In addition, companies also hold refined product inventories, which would extend effective coverage further," Dubey said. Indian refiners do not provide data on crude oil stocks or stocks of petroleum products.

 

India currently consumes around 5.5 million barrels of crude oil per day, of which roughly 90% is imported. One tonne of crude converts to roughly 7.3 barrels, though the exact yield varies with density — lighter grades produce more barrels per tonne, while heavier crudes produce fewer. India predominantly imports medium-to-heavy sour crude grades.

 

Since India has around 100 million barrels of oil, including as strategic reserves and inventory with refiners, a back of the envelope calculation shows this will meet demand for 20 days. Given these data points – strategic reserves that can cover 5-6 days of consumption and total reserves of 100 million tonnes that can cover 20 days of consumption – the estimate that consumption of 40-45 days can be covered implies the stock of petroleum products with the refiners would be enough to cover consumption of another 20 days.

 

The military conflict in West Asia has caused significant disruption to traffic in the Strait of Hormuz, a strategically critical sea passage which connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. Roughly half of India's oil imports are shipped through this chokepoint, primarily from Iraq, Saudi Arabia, the United Arab Emirates, and Kuwait, as per Kpler. According to the BBC, around 150 tankers have dropped anchor in open Gulf waters beyond the Strait of Hormuz. "India's crude dependence on supplies routed via Hormuz has risen to (around) 51% (in 2026), up from (around) 39% in 2024, materially increasing its exposure," Harshraj Aggarwal, analyst at YES Securities said.

 

CAPACITY ISSUE

The Centre set up Indian Strategic Petroleum Reserves as a special purpose vehicle in 2004 to bolster the country's energy security. The strategic reserves currently have a total capacity of 5.3 million tonnes of crude stored in underground caverns — 1.3 million tonnes at Visakhapatnam, 1.5 million tonnes at Mangaluru, and 2.5 million tonnes at Padur in Karnataka.

 

In 2021, the government approved a Phase-II expansion, adding 4 million tonnes of capacity at Chandikhol in Odisha and an additional 2.5 million tonnes at Padur to strengthen the emergency buffer. As of Mar. 31, 2025, the additional capacities were still not operational. India's overall strategic petroleum reserve can last around 74 days, Oil Minister Hardeep Singh Puri had said in the Rajya Sabha earlier in February. "We calculate our reserves not only in caverns but also in our refineries. Our reserves in the caverns are in Andhra Pradesh and Karnataka and we are hoping to get started in Odisha soon," Puri had said.

 

The government should have filled up strategic reserves with Russian crude oil which was available at a discount a few years ago, one analyst tracking the sector said. However, another analyst said that even if we were to source cheaper oil, capacities for strategic reserves are very low.

 

The expenditure towards these reserves have also fallen. The government had spent INR 1.3 billion on India's strategic petroleum reserves in 2024–25 (Apr–Mar). For FY26, it initially earmarked INR 58.8 billion for the programme, but later slashed the allocation to INR 10.4 billion. The outlay has been pared back even further for FY27, with just INR 2 billion budgeted for the initiative.

 

"Negotiations were happening between Iran and the US for quite some time, perhaps India should have sensed the mood and filled the reserves when it could," the analyst quoted above said.

 

"Taking advantage of low crude oil prices in April/May 2020, Strategic Petroleum Reserves were filled to full capacity, leading to notional savings of approximately INR 5,000 crore (INR 50 bln)," Puri's ministry had said in February.  End

 

Edited by Ashish Shirke

 

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