India's Oil Reserves During War: A Comprehensive Analysis of Strategic Petroleum Reserves, Import Diversification & Energy Security

Executive Summary: India's Energy Security Position

As of March 2026, India maintains a combined energy buffer of over 250 million barrels (approximately 4,000 crore litres) of crude oil and refined petroleum products across its supply chain. This stockpile provides 7-8 weeks of coverage across the entire energy system, from underground strategic caverns to refinery inventories and pipeline networks.

India's strategic petroleum reserves, with a total capacity of 5.33 million tonnes, are currently filled to approximately 80% capacity. These reserves are stored in underground rock caverns at three locations: Visakhapatnam, Mangaluru, and Padur. Combined with commercial inventories held by refineries and marketing companies, India's total storage provides a robust safety net against supply disruptions.

India's Import Dependence: Understanding the Vulnerability

India is the world's third-largest importer and consumer of crude oil, importing approximately 88-90% of its crude oil requirements. The country consumes roughly 5.3-5.8 million barrels per day, while domestic production stands at only around 0.6 million barrels per day.

Petroleum imports already account for around 25-30% of India's total imports, making oil prices a key driver of the country's external balance. Every $10 increase in crude oil prices adds approximately $12-15 billion to India's annual import bill. If crude prices remain elevated toward $120 per barrel through FY27, India's oil trade deficit could surge to nearly $220 billion, pushing the current account deficit wider.

Beyond crude oil, India imports more than 60% of its LPG demand and over half of its liquefied natural gas requirements, most of which originate from the Gulf region. Approximately 55% of India's LPG consumption and 30% of LNG consumption transits through the Strait of Hormuz.

Strategic Petroleum Reserves: India's Energy Insurance Policy

India established its Strategic Petroleum Reserves (SPR) program to function as a national emergency buffer against supply disruptions. The underground storage caverns are located in:

• Visakhapatnam, Andhra Pradesh: 1.33 million tonnes capacity
• Mangaluru, Karnataka: 1.5 million tonnes capacity
• Padur, Karnataka: 2.5 million tonnes capacity

Total strategic storage capacity: 5.33 million tonnes (approximately 39 million barrels).

According to S&P Global Ratings, strategic petroleum reserves currently cover around 10 days of consumption, while commercial oil stocks provide roughly 65 days of supply. Stockpiles for other fuels are more limited: LPG reserves are estimated at 25-30 days and LNG reserves at 10-12 days.

However, government sources emphasize that these figures understate total system resilience. Crude oil and petroleum products are stored across multiple locations including underground caverns, above-ground tanks, pipelines, terminal tankage, and offshore storage vessels. The combined 250+ million barrel buffer across the entire supply chain provides 7-8 weeks of coverage.

Import Diversification: From 27 to 40 Countries

Over the past decade, India has systematically reduced its dependence on any single region or maritime route. The number of crude oil supplier countries has expanded from 27 to 40 across six continents.

Top Crude Oil Suppliers to India (April-January 2026):

Despite international pressure, Russia remains India's largest crude oil supplier as of February 2026, with imports of approximately 1.1 million barrels per day. India has consistently maintained its independent energy policy, with government sources stating: "Ours is an India first policy".

Purchases from Venezuela resumed in February 2026 at around 142,000 barrels per day.

The Strait of Hormuz: Assessing the Risk

The Strait of Hormuz is one of the world's most critical energy chokepoints, through which roughly 20% of global oil supply normally transits. For India, the exposure is significant but manageable:

• Crude oil: Approximately 40% of imports pass through Hormuz; 60% use alternative routes
• LPG: About 55% of consumption depends on Hormuz transit
• LNG: Approximately 30% of imports use this route

As of March 11, 2026, 28 Indian-flagged vessels were operating in the Persian Gulf region with 778 Indian seafarers onboard. Shipping authorities have established 24-hour monitoring systems and enhanced security protocols.

The price impact has been immediate. The Indian crude basket reached $113.57 per barrel on March 11, 2026, compared to the $62-70 range maintained through most of FY2025-26. Brent crude futures surged past $100 per barrel as markets priced in the possibility of prolonged supply constraints.

Government Emergency Measures: March 2026 Response

In response to the escalating US-Iran-Israel conflict, the central government has activated multiple emergency protocols:

1. 24×7 Monitoring and Supply Tracking

A round-the-clock control room has been established to monitor India's petroleum stocks and fuel availability across the country. Authorities confirmed on March 11 that inventories of petrol, diesel, and aviation turbine fuel remain sufficient to manage short-term disruptions.

2. Natural Gas Prioritization (Control Order, March 9, 2026)

Under the Essential Commodities Act, the government issued a Natural Gas Control Order establishing priority allocation:

• Priority 1: Domestic PNG, CNG for vehicles, LPG production — full allocation guaranteed
• Priority 2: Fertilizer sector — minimum 70% of average demand to be fulfilled
• Priority 3: Industrial users (tea plantations, manufacturing) — up to 80% of average consumption

3. LPG Production Enhancement

Oil refiners and petrochemical complexes have been directed to maximize production of C3 and C4 streams (propane, butane, etc.) for diversion into the LPG pool. Results:

• Domestic LPG production has increased by approximately 25%
• Most locally produced LPG is prioritized for household consumption
• A committee has been formed to review commercial LPG allocations for restaurants, hotels, and industries

4. Consumer Demand Management

• Minimum gap between LPG bookings temporarily increased from 21 days to 25 days to prevent hoarding
• Delivery Authentication Code (DAC) system expanded to prevent diversion and improve transparency
• Officials clarified that the average LPG delivery cycle remains around 2.5 days despite panic bookings

5. Financial Support for Oil Marketing Companies

The central government has approved ₹300 billion (US$3.24 billion) in compensation to offset LPG under-recoveries and maintain retail price stability. Public sector oil companies had previously absorbed losses of ₹24,500 crore for petrol and diesel and approximately ₹40,000 crore for LPG to keep prices stable.

Refining Capacity: A Strategic Asset

India's domestic refining capacity has reached 258 million metric tonnes per annum (MMTPA), exceeding the national consumption demand of 210-230 MMTPA. This surplus capacity provides critical flexibility:

• Refineries can process a wide variety of crude oils, allowing India to source from diverse global markets
• India has become the fifth-largest exporter of petroleum products globally
• During the Russia-Ukraine conflict, Indian refiners helped bridge fuel gaps in Europe following sanctions on Russian crude

Government officials confirm that domestic refineries are currently operating at high utilization levels, in some cases exceeding rated capacity.

Ethanol Blending: Reducing Import Dependence

India's ethanol blending program has emerged as a significant contributor to energy security. The 20% ethanol blending target has been achieved, up from just 1.4% in 2014. This program now displaces roughly 44 million barrels of crude oil annually.

Speaking at India Energy Week 2026, Neeraj Mittal, Secretary, Ministry of Petroleum and Natural Gas, noted: "India's bioenergy sector has the potential to grow significantly faster than overall energy demand and emerge as a key pillar of energy security, emissions reduction and rural development".

Expert Analysis: Economic and Market Implications

S&P Global Ratings Assessment

S&P Global Ratings has warned that India's limited strategic energy stockpiles pose a risk given the country's high import dependence. The agency notes that several Asian economies — including India, Thailand, South Korea, Vietnam and Singapore — have large energy import requirements relative to GDP.

Government sources have pushed back against this characterization, emphasizing the 250 million barrel total system buffer and diversified supply sources.

Inflation Impact Assessment

Finance Minister Nirmala Sitharaman informed Parliament that the recent increase in crude oil prices is not expected to cause a sharp spike in inflation. According to the Monetary Policy Committee's October report, a 10% rise in crude oil prices typically leads to an increase of about 30 basis points in inflation.

Services Exports and Remittances as Buffers

A DSP Netra report highlights that strong services exports and steady remittance inflows could help cushion the impact of rising crude oil prices on India's economy. While crude price spikes remain a key macro risk, their impact on the current account balance could be more moderate compared with earlier cycles due to this structural shift.

MSCI Analysis: Investor Implications

MSCI's multi-asset analysis of geopolitical shocks reveals important patterns for investors:

• Historical pattern: Geopolitical shocks typically caused losses that faded within a month, unless conflict triggered sustained oil supply disruption (as in Russia-Ukraine)
• Emerging markets burden: EM has borne a disproportionate impact across both equities and fixed income
• Defensive sectors: In EM, defensive sectors (consumer staples, health care, utilities) outperformed during the current conflict
• Minimum volatility: This factor outperformed across all regions, reflecting broad rotation into lower-risk exposures
• Traditional hedges: The equity-bond hedge has weakened significantly since 2022; gold and USD have proven more reliable diversifiers

Future Outlook: India's Long-Term Energy Security Strategy

India is actively strengthening energy security through multiple initiatives:

• Strategic reserve expansion: Additional underground caverns are planned to increase SPR capacity
• Domestic exploration: Prime Minister Modi announced that India's energy sector offers $500 billion in investment opportunities, including in exploration, refining, and LNG
• Exploration targets: India aims to expand exploration coverage to 1 million square kilometers and raise oil and gas sector investments to $100 billion by 2030
• Renewable energy: Non-fossil fuel capacity has reached around 267 GW
• Green Hydrogen Mission: Moving decisively from ambition to execution, supported by competitive renewable energy costs

Pankaj Jain, Former Secretary, Ministry of Petroleum and Natural Gas, cautioned: "Energy cannot play catch-up. Energy has to anticipate," calling for integration of data across petroleum, power, coal and gas to support macroeconomic forecasting.

Frequently Asked Questions

How many days of oil reserves does India actually have?

India maintains over 250 million barrels (4,000 crore litres) of crude oil and petroleum products across its supply chain, providing 7-8 weeks of coverage. Strategic petroleum reserves alone cover approximately 10 days, while commercial inventories provide the remaining buffer.

Will fuel prices increase in India due to the Iran conflict?

While global crude prices have risen sharply (Indian basket reached $113.57/barrel on March 11), government officials indicate no immediate plans to raise retail fuel prices. The government has approved ₹300 billion in compensation to oil marketing companies to maintain price stability.

Is there an LPG shortage in India?

Domestic LPG supplies remain adequate, with production increased by approximately 25%. However, commercial LPG distribution to restaurants and hotels has slowed as supplies are prioritized for household consumers. The minimum booking interval has been extended to 25 days to prevent hoarding.

What happens if the Strait of Hormuz is completely blocked?

Approximately 60% of India's crude imports would continue flowing through alternative maritime routes from Russia, West Africa, the Americas, and Central Asia. Additional crude cargo shipments are already en route to Indian ports. The remaining 40% would need to be replaced through diversified sourcing, which is feasible given India's expanded supplier network of 40 countries.