What Happened
- Prime Minister Narendra Modi, speaking in the Lok Sabha, stated that India is in active talks with global partners to ensure safe passage for vessels carrying essential commodities through the Strait of Hormuz amid the ongoing West Asia conflict.
- The government announced plans to develop an additional 6.5 million tonnes of strategic petroleum reserves, adding to India's existing Phase-I capacity of 5.33 million metric tonnes.
- PM Modi drew a parallel to India's resilience during the COVID-19 pandemic, expressing confidence that the country would overcome the current energy crisis through diversification and diplomatic engagement.
- India has already secured alternative crude supply routes — approximately 70% of its current imports now arrive via routes outside the Strait of Hormuz.
- The situation has underscored India's structural vulnerability: it imports ~88% of its crude oil requirements, spending over $120 billion annually, and the Strait of Hormuz has historically been the transit point for over 50% of those imports.
Static Topic Bridges
Strait of Hormuz: The World's Most Critical Oil Chokepoint
The Strait of Hormuz is a narrow waterway between Iran and Oman, at its narrowest just 33 km wide. It is the world's single most important oil transit chokepoint: approximately 21 million barrels per day (bpd) — roughly 21% of global oil consumption — transited it in 2023. For India, the Strait is the gateway for crude oil from Saudi Arabia, UAE, Iraq, Kuwait, and Iran. In times of crisis, Iran — which borders the Strait — has historically threatened to close it in retaliation for sanctions or military action. Any blockade, even a partial one, causes immediate spikes in global crude oil prices and insurance/freight costs, directly affecting India's import bill and fuel prices.
- Location: between Iran (north) and Oman/UAE (south)
- Minimum navigable channel width: ~3.2 km (in each direction)
- Daily transit (2023): ~21 million barrels of oil + ~4 billion cubic feet of LNG
- Countries most affected by closure: India, China, Japan, South Korea, EU
- India's historical dependence: ~52% of crude imports via Hormuz (as of early 2026)
Connection to this news: India's diplomatic push for safe passage and its SPR expansion are direct strategic responses to the Hormuz disruption — a crisis that exposes the single-point vulnerability in India's energy supply chain.
India's Strategic Petroleum Reserves (SPR): Phase I and Phase II
India established its Strategic Petroleum Reserve (SPR) programme under the Indian Strategic Petroleum Reserves Limited (ISPRL) as a Phase-I initiative following the oil price shocks of the 2000s. Three underground rock cavern facilities were built: - Visakhapatnam, Andhra Pradesh: 1.33 MMT - Mangaluru, Karnataka: 1.5 MMT - Padur, Karnataka: 2.5 MMT
Total Phase-I capacity: 5.33 MMT (~39 million barrels), equivalent to approximately 9.5 days of India's crude consumption. Phase-II, approved by the Union Cabinet in July 2021, targets an additional 6.5 MMT at Chandikhol (Odisha, 4 MMT) and Padur expansion (Karnataka, 2.5 MMT), under a Public-Private Partnership model. PM Modi's announcement of 6.5 MMT additional capacity refers to this Phase-II rollout.
- Phase-I total: 5.33 MMT (Visakhapatnam + Mangaluru + Padur); ~9.5 days of consumption
- Phase-II target: 6.5 MMT additional (Chandikhol + Padur extension); PPP model
- Combined Phase I+II capacity (planned): ~11.83 MMT (~87 million barrels)
- IEA recommendation: member states hold 90 days of net import cover; India's current cover: ~9.5 days
- Underground rock caverns used (not above-ground tanks): safer, lower evaporation, harder to destroy
Connection to this news: The 6.5 MMT expansion directly addresses the gap between India's current 9.5-day cover and the IEA standard of 90 days, making it a structural long-term hedge against supply disruptions like the current Hormuz crisis.
India's Crude Oil Import Diversification Strategy
India's response to energy vulnerability has been multi-pronged: diversifying source countries (from ~27 in 2021 to ~40 in 2026), developing alternative maritime routes (Cape of Good Hope, Cape Agulhas, Arctic), increasing domestic production, and accelerating renewables deployment. Russia emerged as India's largest single crude supplier in 2022-24, leveraging discounts of $10–15 per barrel versus Brent — a strategic opportunity created by Western sanctions. India also imports from the US (WTI crude), Latin America (Brazil, Venezuela), West Africa (Nigeria, Angola), and Australia (LNG). This diversification is the immediate operational response to any Hormuz closure, though it increases shipping time (e.g., Russian crude via Cape of Good Hope adds 7–10 days).
- India imports crude from ~40 countries (as of 2026)
- 70% of current imports routed outside the Strait of Hormuz
- Russian crude share of Indian imports: ~35–40% (2023-24)
- US crude share: ~3–5% (growing under US-India energy partnership)
- Domestic crude production covers ~12–13% of India's total requirement
Connection to this news: PM Modi's reference to "talks with global partners" reflects diplomatic efforts spanning Gulf countries, the US, and shipping alliances — a coordinated maritime safety regime backed by supply diversification as the operational backup.
Energy Security as a National Security Imperative
India's oil import bill stood at ~$132 billion in FY 2023-24, making it one of the largest components of the current account deficit. A $10 per barrel increase in crude oil prices adds approximately ₹1 lakh crore (~$12 billion) to India's annual import bill and widens the current account deficit by 40–50 basis points. The rupee also depreciates when oil prices spike, compounding the impact. This linkage between energy security and macroeconomic stability makes the Strait of Hormuz crisis a direct threat to India's fiscal and monetary stability — not just a foreign policy challenge.
- India's crude oil import bill FY 2023-24: ~$132 billion
- Oil imports as share of total merchandise imports: ~25–28%
- Impact of $10/barrel increase: ~₹1 lakh crore additional annual cost
- India's current account deficit: historically sensitive to oil price volatility
- Ethanol blending (E20), EVs, and hydrogen policy: structural demand-side responses
Connection to this news: The PM's Lok Sabha statement frames the Strait of Hormuz crisis as a direct economic concern — justifying both the diplomatic engagement and the domestic strategic reserve expansion as instruments of macroeconomic protection.
Key Facts & Data
- India imports ~88% of crude oil requirements; annual bill: ~$132 billion (FY 2023-24)
- ~52% of India's crude imports historically pass through the Strait of Hormuz
- Current SPR (Phase I): 5.33 MMT at Visakhapatnam, Mangaluru, Padur — ~9.5 days consumption
- Phase II SPR expansion: 6.5 MMT additional (Chandikhol + Padur); approved July 2021; PPP model
- 70% of India's current crude imports routed outside Strait of Hormuz
- India imports from ~40 countries (diversified from ~27 in 2021)
- Strait of Hormuz daily transit: ~21 million barrels (~21% of global oil consumption)
- India is world's third-largest oil consumer and second-largest importer
- $10/barrel crude price increase adds ~₹1 lakh crore to India's annual import bill