India Stores Crude Oil: Amid rising tensions involving Israel and the United States, fears have grown that Iran may attempt to block the Strait of Hormuz. Such a move could disrupt oil shipments and hurt major importers, including India, the world’s third-largest oil importer. This disruption could lead to supply shortages and a spike in oil prices. Gas and crude prices have already surged following the US and Israeli attacks on Iran.
Despite these developments, India remains relatively calm. The country draws confidence from its diversified crude supply sources. A large share of its oil imports bypasses the Strait of Hormuz. Petroleum and Natural Gas Minister Hardeep Singh Puri emphasized that this supply diversification acts as a buffer.
However, Puri didn’t mention another key factor that boosts India’s preparedness, its strategic crude oil reserves. India stores millions of metric tonnes of crude in underground rock caverns located at three critical sites. These sites are spread across Tamil Nadu, Karnataka, and Andhra Pradesh.
How India Stores Crude Oil?
Petroleum Minister Hardeep Singh Puri stated that India continues to overcome global supply challenges and price shocks by relying on its crucial buffer mechanisms. To reduce the risks linked to instability in the Middle East, India, largely dependent on crude oil imports, has significantly diversified its sources over time.
India has actively turned to countries like the United States, Nigeria, Angola, and Brazil for crude oil, even though deliveries from these nations require longer sea routes through the Suez Canal, Panama Canal, or around the Cape of Good Hope. These longer routes raise both transit time and shipping costs. However, this diversification strategy has helped India reduce its reliance on the Strait of Hormuz. India has also continued to import oil from Russia, despite Western sanctions. Now, it is likely to raise Russian imports to 2.2 million barrels per day, a two-year high, according to data from international trade analytics firm Kpler. This volume is set to surpass India’s combined purchases from Saudi Arabia and Iraq.
Even during past wars and regional conflicts, the Strait of Hormuz has never been entirely closed, though tensions have disrupted traffic. Indian refineries have consistently adapted to sudden supply disruptions. Long-term agreements with countries like Saudi Arabia, Iraq, and Russia not only ensure a steady flow of crude oil but also help India reduce its vulnerability to geopolitical tensions.
Where Does India Store Crude Oil?
Since these transactions involve spending valuable foreign currency, oil-importing companies—especially in India—carefully plan their crude imports to avoid disruptions caused by price volatility. In such situations, India relies on its Strategic Petroleum Reserves (SPR), which the government stores in underground rock caverns.
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India builds its energy security on the foundation of its Strategic Petroleum Reserves (SPR), which the Indian Strategic Petroleum Reserves Limited (ISPRL) manages under the Ministry of Petroleum and Natural Gas. Engineers have developed three massive underground rock caverns that lie 90 meters below the surface, stretch up to a kilometer in length, and rise as tall as a ten-story building.
At Visakhapatnam, India, constructed one of the world’s deepest underground fuel storage facilities, an LPG cavern located 196 meters below mean sea level. The three existing SPR sites currently hold a combined 5.33 million metric tonnes (MMT) of crude oil. This amount nearly equals the 5 million barrels India consumes daily. In addition to these three facilities, the government plans to build more storage sites to strengthen energy security further.
India’s Buffer Oil Stock:
India currently stores 5.33 million tonnes, or around 38 million barrels, of crude oil in its strategic reserves. At the 2019–2020 consumption levels, this stockpile can meet the country’s crude oil demand for about ten days. Once Phase II is completed, India expects to expand its reserves to cover up to 22 days of demand.
India also holds other forms of oil reserves beyond the underground caverns. The government can increase this buffer by investing in oil marketing companies. This combination strengthens India’s position amid global supply uncertainties. These reserves act as a shield against external shocks.
According to government sources, India took a strategic advantage of the COVID-19 pandemic in 2020. When global oil prices dropped, India decided to buy and store petroleum in its underground rock caverns. The move helped the country save approximately ₹5,000 crore during that period.
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