India’s strategic oil reserves: India has moved from merely acknowledging its oil vulnerability to reviewing how much energy security cover it needs. Union petroleum minister Hardeep Singh Puri recently said the government is reworking India’s strategic requirements for oil and gas reserves, after fresh instability in West Asia again exposed the risks faced by import-dependent economies. At the CII Annual Business Summit 2026, he said India had adequate supplies, including roughly 69 days of crude and LNG stock and 45 days of LPG stock, but the larger policy question remains unresolved.
For India, West Asia is not a distant geopolitical theatre. It is a core energy source. A disruption in the region can affect freight, insurance, crude supply, prices, inflation and the current account. Defence minister Rajnath Singh had earlier called for a reassessment of reserve requirements. Puri’s remarks suggest that the energy security debate is now moving beyond routine assurances on supply.
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Strategic petroleum reserves need scale
India’s oil stocks are still thin by the standards of large import-dependent economies. The country has around 74–75 days of cover when strategic reserves and commercial stocks held by refiners are counted together. That is below the 90-day stockholding obligation followed by members of the International Energy Agency, which requires stocks equivalent to at least 90 days of net oil imports.
The contrast with other major economies is sharp. The United States’ Strategic Petroleum Reserve has an authorised capacity of 714 million barrels, stored in underground salt caverns along the Gulf Coast. It is not merely a storage system. It is a tool of market intervention and foreign policy.
China’s system is less transparent, but its direction is clear. It has expanded both state-controlled stockpiles and commercial inventories over the past decade. The lesson is plain. In a volatile market, stocks are not dead assets. They give governments time, bargaining space and the ability to avoid panic buying.
India’s oil storage gap is costly
India started late. Its strategic reserves are managed by Indian Strategic Petroleum Reserves Ltd. The three underground facilities at Visakhapatnam, Mangaluru and Padur have a combined capacity of 5.33 million tonnes. At full capacity, these caverns provide about 9.5 days of crude requirement. Expansion has been proposed, but financing, land and implementation delays have slowed progress.
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The more immediate concern is not only capacity, but utilisation. A cavern that is only partly filled offers limited protection during a crisis. In March 2026, the government informed Parliament that India’s strategic petroleum reserves were about 64% full, with around 3.37 million tonnes of crude stored against total capacity of 5.33 million tonnes. That would cover only about five days of demand at current consumption levels. India, therefore, has two tasks: build more storage and keep existing caverns adequately stocked.
The cost of delay has been visible. The pandemic, the Russia-Ukraine war and now the West Asia crisis have shown how quickly a supply concern becomes a price shock. If India had larger storage capacity in 2020, it could have bought more crude when prices collapsed. The missed gain was not only fiscal. It was strategic.
A reserve is not expected to eliminate risk. It buys time. It allows refiners, ministries and markets to adjust without a scramble. In an economy where fuel prices feed into transport costs, food inflation, fertiliser subsidies and the trade deficit, that time has value.
Energy security needs hybrid storage
Expanding underground caverns is necessary, but not enough. India needs a wider storage ecosystem: commercial tankage, floating storage, LNG terminals, pipeline-linked facilities and overseas storage arrangements. Many countries use hybrid models that combine public reserves with private participation.
India has already experimented with leasing storage to foreign oil companies while retaining rights over supplies during emergencies. Such models can reduce the fiscal burden. They also bring discipline into stock rotation, maintenance and utilisation. But storage expansion must be backed by clear rules on release, replenishment, leasing and emergency access. Without such a framework, reserves can become expensive infrastructure with uncertain operational value.
The Phase-II programme gives India a chance to correct scale and design. The approved expansion includes a 4 million tonne facility at Chandikhol in Odisha and a 2.5 million tonne facility at Padur in Karnataka. ISPRL describes these as commercial-cum-strategic reserves. Recent official disclosures show land acquisition at Padur is close to completion, while rate and acreage finalisation at Chandikhol is under way.
The same logic applies to natural gas and LPG. Gas storage is more complex than crude storage. It requires terminals, regasification capacity, pipeline connectivity and demand planning. But India cannot raise the share of gas in its energy mix while treating storage as an afterthought. LNG terminals and pipeline networks must be part of the reserve strategy, not separate infrastructure projects.
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The reserve strategy must also look beyond crude. A crisis affects diesel, petrol, aviation turbine fuel, LPG and fertiliser-linked gas. Crude in a cavern is useful only if refineries, ports, pipelines and product distribution systems remain functional. Energy security is, therefore, a logistics question as much as a storage question.
Strategic oil reserves and the energy transition
Strategic reserves cannot substitute for diversification. India must expand renewable energy, electrify transport, improve efficiency and reduce the oil intensity of growth. But hydrocarbons will remain central to transport, industry, petrochemicals and cooking fuel for years.
That makes reserves a bridge, not a retreat from the energy transition. They protect the economy while cleaner systems scale up. They also reduce the pressure to make hurried policy choices during crises.
The fiscal argument against reserves is familiar. Building and maintaining them requires capital. Returns are indirect. But energy price shocks impose real costs through inflation, import bills, subsidies, currency pressure and slower growth. Storage is not a sunk cost. It is insurance.
The government should use the present crisis to correct course. Joint storage projects with producing nations, private participation in commercial tankage, faster completion of proposed caverns, adequate filling of existing reserves and a clear gas storage policy should be treated as one package. India cannot prevent every shock. It can decide how exposed it wants to be when the next one arrives.
Energy security cannot remain a slogan invoked after every crisis. Strategic reserves are only one part of the answer. But without adequate reserves, every crisis begins with a shortage of options.