The Gulf War has entered its 6th month, creating unprecedented supply disruptions that are reshaping global energy markets. Middle East oil output is now less than half its prewar volume, with Saudi Arabia's hydrocarbon output falling 25% and GDP declining 4.8% in Q2 according to Reuters data. Saudi Aramco CEO Amin Nasser warned that the world has lost 1 month's oil supplies and would take up to 18 months to replace lost inventory. Global oil and product inventories are heading towards record lows, with shipping companies increasingly worried about Iran potentially controlling the Strait of Hormuz.
To safeguard energy sovereignty against external geopolitical demands, India has expanded its energy sourcing network significantly, now sourcing crude oil from 41 countries compared to 27 earlier, as reported by the Ministry of Petroleum and Natural Gas to Rajya Sabha. The country maintains 10 to 12 days of government strategic reserves and 70 to 75 days of commercial stocks, sitting comfortably close to the G7 benchmark of 90 days of import cover. Liquefied natural gas sourcing has also been expanded to 15 countries from six, with Minister of State for Petroleum and Natural Gas Suresh Gopi stating that this diversification reduces dependence on any particular country, region or transit route. "This diversification has reduced dependence on any particular country, region or transit route and enhanced India's ability to manage supply disruptions and market volatility," Gopi said in a written reply to the upper House.
Amid mounting energy security concerns, the Centre is developing two new strategic petroleum reserves (SPRs) at Bikaner in Rajasthan and Bina in Madhya Pradesh, as reported by a parliamentary committee report. ISPRL has completed the feasibility study for the Bikaner caverns and is in the process of finalising it, while a pre-feasibility study for Bina has also been completed, with a detailed feasibility report to be initiated soon. This expansion is in addition to the 1.7 million tonne storage facility being planned at Mangalore, adjacent to its existing Phase-I facility, where ISPRL has completed a feasibility study, acquired 155 acres of land and is in the process of obtaining special economic zone (SEZ) notification for 66 acres. India currently has strategic crude storage capacity of 5.3 million tonnes across Vishakhapatnam, Mangaluru and Padur, with Prime Minister Narendra Modi targeting an additional 6.5 million tonnes of crude reserves.
India's crude oil import bill surged nearly 60% to $49.8 billion in Q1FY27, even as oil import volumes fell to about 60 million tonnes from 62.6 million tonnes year-earlier, according to government data. The world's third-largest oil importer had spent about $31 billion on crude in the corresponding period of the previous fiscal. A $1 increase in oil prices sustained for a year can raise India's annual import bill by ₹18,000 crore, with implications for the external sector, inflation and growth. The parliamentary committee has urged the government to move towards maintaining the global standard of 90 days of crude-oil storage, noting that India usually maintains stocks for about 77 days taking into account all storage facilities.
The supply disruptions are creating unprecedented price pressures across transport fuels, with gasoline, diesel, jet and bunker fuel most at risk of price hikes and shortages as the war moves into autumn. Banerjee noted that every $10 jump in the average price of oil for India translates into a $15 billion jump in the annual oil import bill, emphasizing that prolonged crude spikes above $100 per barrel pose a far greater risk than losing Russian discounts. The White House has been determined to keep prices below $100/bbl, but this tactic has only deferred the problem. The International Energy Agency mandates 90 days of stocks for permanent membership, making India's current 77-day coverage a significant vulnerability.
