What Happened
- The Indian government set up a high-level inter-ministerial panel to monitor risks to energy supply and trade flows arising from the intensifying Iran conflict and the effective closure of the Strait of Hormuz.
- Officials reviewed India's Strategic Petroleum Reserves (SPR) and assessed the buffer available — approximately 9.5 days of crude supply — and directed state-run refiners to actively diversify crude sourcing beyond West Asia.
- The government is in discussions with alternative suppliers including West Africa, the United States, Latin America, and Russia to secure crude supply against potential prolonged disruption.
- The immediate concern beyond crude oil is LPG (cooking gas) — India imports over 90% of its LPG from the Middle East, and households could face shortages within weeks if the Strait of Hormuz remains closed.
- India's Petroleum Minister Hardeep Puri stated that India is "well stocked" for now, with approximately 8 weeks of combined commercial and strategic stocks, providing near-term comfort even as medium-term alternatives are secured.
- The panel is also monitoring currency risks, since a sustained oil price surge would widen India's Current Account Deficit and put pressure on the rupee.
Static Topic Bridges
India's Strategic Petroleum Reserves (SPR)
India established its Strategic Petroleum Reserve programme after the 1970s oil shocks and the 1990–91 Gulf War disruptions demonstrated the vulnerability of oil-import-dependent economies. The Indian Strategic Petroleum Reserves Limited (ISPRL), a subsidiary of the Oil Industry Development Board (OIDB) under the Ministry of Petroleum and Natural Gas, manages the SPR facilities.
- Total SPR capacity: 5.33 Million Metric Tonnes (MMT) of crude oil across 3 underground rock cavern facilities
- Visakhapatnam (Andhra Pradesh): 1.33 MMT capacity, commissioned 2015
- Mangaluru (Karnataka): 1.5 MMT capacity
- Padur (Karnataka): 2.5 MMT capacity — largest, with four compartments
- Current SPR: provides approximately 9.5 days of consumption cover
- Expansion planned: Chandikhol (Odisha, 4 MMT) and additional Padur facility (2.5 MMT) on PPP mode — would raise total SPR to ~15 MMT
- IEA recommends 90 days of net import cover for member countries; India (as associate member) falls significantly short
Connection to this news: The crisis has exposed the inadequacy of India's 9.5-day SPR coverage, reinforcing arguments for accelerating the Chandikhol and expanded Padur facilities as a matter of national energy security.
The Strait of Hormuz: World's Most Critical Oil Chokepoint
The Strait of Hormuz is a narrow waterway connecting the Persian Gulf to the Gulf of Oman and the Arabian Sea. It is the single most important oil transit chokepoint in the world — there is no alternative sea route for oil tankers from Kuwait, Iraq, Iran, Qatar, Bahrain, and the UAE to reach global markets.
- Approximately 20–21 million barrels per day transit the Strait (around 27% of global seaborne oil trade)
- 84% of crude and condensate through the Strait goes to Asian markets — India, China, Japan, South Korea are the largest buyers
- India sources more than 50% of its crude from countries that export through the Strait
- The Strait is only 21 miles wide at its narrowest point, easily subject to blockade or mining
- Historical precedent: During the Iran-Iraq War (Tanker War, 1984–1988), over 400 ships were attacked; the US Navy launched Operation Earnest Will to escort Kuwaiti tankers
Connection to this news: The 2026 closure — the first sustained halt of Hormuz traffic in modern history — is qualitatively different from previous crises and poses structural rather than episodic risks to India's energy supply chain.
India's LPG Dependence and Household Energy Vulnerability
India is the world's second-largest LPG consumer, with Pradhan Mantri Ujjwala Yojana (PMUY) having expanded cooking gas access to over 100 million Below Poverty Line households since 2016. This dependence on LPG — heavily sourced from Qatar and other Persian Gulf producers — creates a direct link between West Asia geopolitics and domestic household energy security.
- India imports more than 90% of its LPG from Middle East countries, primarily Qatar (via Qatar Petroleum) and Saudi Arabia
- PMUY: Launched in 2016, provided free LPG connections to BPL households; over 100 million connections given
- India's total LPG consumption: approximately 28–30 million metric tonnes annually
- Force majeure declarations by Qatari suppliers in early March 2026 have triggered immediate concern about LPG supply
- Domestic cooking gas subsidies make LPG politically sensitive — any shortage or price spike has direct welfare implications
Connection to this news: The government's risk panel is specifically focused on LPG as the most immediately vulnerable import category, with contingency plans for rationing and alternative sourcing if the Strait remains blocked beyond 2–3 weeks.
Key Facts & Data
- India imports 85–88% of its crude oil requirements — one of the highest import dependence ratios among large economies
- India's SPR capacity: 5.33 MMT across Visakhapatnam, Mangaluru, and Padur — equivalent to ~9.5 days of consumption
- Combined commercial + strategic stock: approximately 8 weeks as of early March 2026
- Qatar supplies roughly 60% of India's LNG and a large share of LPG — both at risk from Hormuz closure
- West Africa, USA, Latin America, and Russia identified as alternative crude suppliers requiring longer shipping times
- The Chandikhol (Odisha) SPR project, if completed, would add 4 MMT capacity — equivalent to approximately 20+ additional days of cover
- ISPRL is a wholly owned subsidiary of Oil Industry Development Board (OIDB) under Ministry of Petroleum and Natural Gas