According to official government sources on today, there has been ample assurance that India is in a "reasonably comfortable" position with regards to energy security amid escalating geopolitical tensions in West Asia following military strikes in Iran.
Official data shows that the country currently has about 25 days of crude oil and refined petroleum product stocks available. This buffer is meant to protect the domestic market from the acute supply shocks that flow from the apparent closure of the Strait of Hormuz a key chokepoint through which almost half of India’s crude imports commonly flow.
No Immediate Price Hikes
While global Brent crude prices surged nearly 10% and past the $80 per barrel mark this week, sources at the Ministry of Petroleum and Natural Gas said they had no plans to raise the prices of petrol or diesel at the moment.
On Monday, Union Minister Hardeep Singh Puri chaired a high-level review meeting tasked with evaluating the supply chain for crude oil, LPG and LNG. The government reportedly has its hands full with various buffers to retain price stability:
- Diversified Sourcing: India now has 41 countries on its supply side, so there's no need for any single region so much.
- Commercial Inventories: Outside of the 25-day immediate reserve, some analysts argue that if rerouted, commercial and strategic underground reserves (found primarily in Mangalore, Padur and Visakhapatnam) will increase this coverage up to 40-45 days.
- Downstream Buffers: Oil Marketing Companies are absorbing some of the volatility in prices using their existing margins.
Keep an eye on the Strait of Hormuz
The main worry for New Delhi lies with the Strait of Hormuz. It is estimated that about 2.5 million barrels per day of Indian imports most of which are from Iraq, Saudi Arabia and the UAE pass through this narrow waterway.
“The current situation is being monitored actively," the Petroleum Ministry said in a post on X. “Any action to ensure the availability and affordability of major petroleum products will be taken in such a manner as deemed necessary.”
Scouting for Alternatives
With the Middle East turmoil on the horizon, India has started with its search for alternative sources of LPG and LNG. Although crude can be brought back from West Africa, Latin America and the United States, Qatar's LNG supply is more vulnerable because of specific maritime routes.
The Ministry of Commerce and Industry also held stakeholder consultations Tuesday with shipping lines and logistics partners to assess the prospect of a spillover effect on India’s export-import cargo flows helping ensure that the country’s economy remains resilient against the “war-risk premiums” currently impacting global shipping.
