India’s energy security has come into sharp focus amid the US-Iran conflict, highlighting the need for robust strategic reserves to counter global supply disruptions, according to a Business Today report by Smriti Jain.
Current Strategic Petroleum Reserves (SPR)
India's dedicated strategic petroleum reserves capacity stands at 5.33 MMT (million metric tonnes), spread across Visakhapatnam, Mangaluru, and Padur, equivalent to roughly 9.5 days of crude oil consumption, as per PIB data released in March 2026. The government has approved a Phase II expansion of 6.5 MMT at Chandikhol (Odisha) and Padur (Karnataka) under a public-private partnership model. Once completed, total SPR capacity will reach 11.88 MMT, moving India significantly closer to the 90-day reserve target. Additionally, India is working with the UAE for 30 million barrels of crude storage capacity.
Expert Recommendations for a Three-Tier Strategy
Experts argue that India's strategic reserve policy should evolve into a broader energy security strategy covering crude oil, LPG, and LNG. Pranav Master, Director of Crisil Intelligence, advocates a three-tier strategic reserves policy:
- Large physical reserves for crude oil
- Distributed operational-security reserves for LPG
- Mainly contractual or virtual reserve model for LNG, as LNG is expensive and technically difficult to store for long periods
Sourav Mitra, Partner – Oil & Gas at Grant Thornton Bharat, suggests that for crude oil, India should target a minimum of 30 days of dedicated strategic reserves managed by Indian Strategic Petroleum Reserve Limited (ISPRL), complemented by a mandatory 60 days of commercial refiner operational stock, bringing total national coverage to about 90 days — in line with International Energy Agency (IEA) standards.
Sumit Ritolia, Lead Analyst, Modelling and Refining at Kpler, also advocates 75–100 days of total inventory cover, consistent with international best practices, noting that expanding strategic crude storage should remain the top priority given India's growing refining capacity and import dependence.
Key Elements of Crude Reserve Policy
According to Pranav Master, the crude reserve policy should incorporate:
- A minimum stockholding requirement to prevent underutilization of storage capacity
- A transparent drawdown and release framework with clearly defined triggers such as geopolitical conflicts, sanctions, shipping disruptions, extreme price shocks, or major supply outages
- A counter-cyclical inventory build-up mechanism that encourages reserve accumulation during periods of low global oil prices rather than emergency purchases during crises
LPG Strategic Reserves
LPG fuel availability impacts more than 330 million households in India. A disruption in LPG supply quickly becomes a household welfare issue and can create social stress. India imports around 60% of its LPG requirement, with a very large share linked to the Gulf region and the Strait of Hormuz. Currently, India holds an insignificant amount of strategic LPG reserve. Experts recommend mandating a dedicated 25–40-day strategic reserve via salt-caverns and an additional 30 days of commercial buffer via import terminals, refineries, and bottling plants.
LNG and Virtual Reserves
For LNG, storage is expensive and technically challenging. Experts advocate a contractual and virtual reserve model, relying on long-term contracts and diversified supply sources rather than physical stockpiles. This approach would leverage India's growing LNG import infrastructure and diplomatic relationships to ensure supply security.
Implications for Traders and Analysts
The strategic reserve buildup signals India's intent to reduce vulnerability to supply shocks. For commodity traders, this means potential changes in import patterns, storage demand, and pricing dynamics. The expansion of SPR capacity and LPG reserves will influence global crude and LPG flows, particularly from the Middle East. Analysts should monitor India's policy triggers for reserve releases, as they could affect spot market prices during crises.
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