India's Oil Reserves Amid Rising Geopolitical Tensions
India's Oil Reserves and Market Stability
As tensions escalate in the Middle East, government sources revealed on Tuesday that India maintains a stockpile of crude and refined oil sufficient for 25 days. Despite a significant surge in global oil prices due to geopolitical strains, there are currently no plans to increase petrol and diesel prices. Brent crude has surged to nearly $80 per barrel, marking a rise of about 10% since the onset of the Iran crisis, with further increases anticipated as Iran has closed one of the world's key oil transit routes, the Strait of Hormuz. For India, this spike in prices translates to a higher import bill.
Impact of Middle Eastern Supply on India
India relies on imports for approximately 88% of its crude oil needs, which serves as the raw material for fuels like petrol and diesel. Over 50% of this oil is sourced from Middle Eastern nations, passing through the narrow Strait of Hormuz, where supply disruptions have occurred amid the Iran crisis. Recently, the U.S. and Israel conducted military strikes in Iran, prompting Tehran to retaliate by launching missiles and drones at countries hosting Israeli and U.S. forces, including the UAE, Qatar, Kuwait, Bahrain, Iraq, Jordan, and Saudi Arabia.
Global Energy Flow and India's Position
Reports indicate that the Strait of Hormuz is nearly closed due to the ongoing conflict, which is a vital route for global energy supplies. Approximately one-third of the world's crude oil exports and about 20% of liquefied natural gas shipments transit through this narrow waterway. As the third-largest oil importer globally, India fulfills nearly half of its crude oil requirements via this strait. Qatar, India's primary supplier of liquefied natural gas (LNG), also utilizes this route to deliver fuel to India.
Alternative Oil Sources for India
Should the strait remain closed, India may turn to suppliers from West Africa, Latin America, and the United States to compensate for the oil shortage from the Middle East. Additionally, India could source oil from Russia to meet its needs. In the fiscal year 2024-25, India exported 23.7 million tons (approximately 474,000 barrels per day) of petroleum products, accounting for 10% of the country's fuel consumption, with total exports reaching 53.3 million tons from April to January.