India Secures Crude Oil Supplies Amid Middle East Tensions
Government Assurance on Oil Supplies
In light of the escalating energy crisis stemming from ongoing conflicts in the Middle East, the Indian government has confirmed that it has secured crude oil supplies for the next two months. Increased imports from Western nations are effectively offsetting any potential disruptions caused by the closure of the Strait of Hormuz. The Ministry of Petroleum and Natural Gas stated, “Currently, India is receiving more crude oil from over 41 suppliers worldwide than what was previously sourced through the Straits. The high availability of oil in international markets, particularly from the West, has compensated for any interruptions.” All refineries are operating at over 100% capacity, with crude oil supplies already arranged for the next 60 days. The ministry emphasized, “There is no supply gap.”
According to the Oil Ministry, India possesses a total reserve capacity of 74 days, with actual stock coverage currently around 60 days, which includes crude stocks, product stocks, and strategic storage, even amidst the ongoing crisis in West Asia.
Domestic Production and LPG Supply
Recent reports indicate that domestic refinery output has increased by 40%, resulting in a daily LPG production of 50,000 metric tonnes, which meets over 60% of the national demand. Consequently, the country’s net daily import requirement has decreased to just 30,000 MT, signifying that India is now producing more than it needs to import. The government noted, “In addition to domestic production, 800,000 MT of guaranteed LPG shipments are already on their way from the United States, Russia, Australia, and other nations, arriving at India's 22 LPG import terminals—double the number of terminals available in 2014.”
“Oil companies are successfully distributing over 5 million cylinders daily. Although the demand for cylinders surged to 8.9 million due to panic buying, it has since stabilized at 5 million. To prevent hoarding and black market activities, commercial cylinder allocations have been increased to 50% in collaboration with state governments,” the ministry added.
Transition to Piped Natural Gas
In a bid to enhance gas network expansion and reduce dependence on a single fuel, the government has mandated that LPG supply to households will cease unless consumers switch to piped natural gas (PNG) where available. PNG is delivered directly to kitchen burners through pipelines, eliminating the need for refill bookings.
India's Oil Deals with Russia
India has also turned to its long-standing ally, Russia, for oil purchases following a waiver from the United States regarding Russian oil. Additionally, India is exploring alternative payment methods to the US Dollar. Reports indicate that Indian refiners have secured approximately 60 million barrels of Russian oil for delivery next month, with cargoes booked at premiums ranging from $5 to $15 per barrel above Brent prices.