What happened?
On Sunday, Union Petroleum and Natural Gas Minister Hardeep Singh Puri stated that India is closely monitoring the evolving geopolitical situation in the Middle East. He affirmed that a significant portion of India’s oil supply does not traverse the Strait of Hormuz, attributing this to the government’s diversification of its crude import sources. Puri also noted that India’s Oil Marketing Companies possess several weeks of supplies and continue to receive energy supplies through various routes. His statement comes as oil markets are anticipated to open sharply higher following US airstrikes on Iranian nuclear facilities. These strikes have increased the risk of retaliation against critical energy infrastructure in the Gulf, with traders preparing for a volatile market opening amidst fears of Iran targeting oilfields, export terminals, or tankers in the Strait of Hormuz.
Indian oil refiners have secured crude oil supplies for the next three months, and the country maintains strategic oil reserves for emergencies, totaling approximately 74 days of oil. Specifically, Indian Oil Corporation Limited (IOCL) has inventory for 40-42 days, Indian Strategic Petroleum Reserves Ltd (ISPRL) holds reserves for over 9 days, and Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) maintain the remainder. In June, Indian oil refiners increased oil sourcing from Russia and the US to mitigate supply risks from the Middle East, leading to a decrease in imports from Saudi Arabia and Iraq. Preliminary data from Kpler indicates India is importing 2.16 million barrels per day (bpd) of Russian oil in June, the highest in two years, and 439,000 bpd from the US, a 66% jump from the previous month. India imports around 40% of its crude oil from Russia and another 40% from Middle Eastern countries, with the rest coming from the US, West African nations, and other suppliers.
Why it matters to India
India’s proactive diversification of crude oil sources and maintenance of strategic reserves are crucial for ensuring energy security amidst geopolitical tensions in the Middle East. By reducing reliance on the Strait of Hormuz, India mitigates potential disruptions to its oil supply, safeguarding its economic stability. The increased imports from Russia and the US demonstrate India’s strategic foresight in securing its energy needs and adapting to global market shifts. This approach reinforces India’s commitment to maintaining stable fuel supplies for its citizens, even in times of heightened international uncertainty.