Last June, when the US and Israel bombed Iran, I asked a senior refinery executive handling crude procurement how he would deal with a closure of the Strait of Hormuz. His response was blunt: such an event could not really be planned for. History suggested it would never happen. The strait had remained open even during wars. The US would not allow it to shut. The world would push back against Iran. And Iran itself depended on open waters to import essentials and export oil.
This view was widely shared. Even when US-Israeli strikes on Iran resumed on Feb 28, many in the industry believed escalation would be contained quickly.
That confidence now looks misplaced. With the strait effectively shut, key export facilities hit, and no clear end to the conflict, supply disruptions are real. Oil and gas flows from the Gulf have stopped. Gas marketers have begun rationing supplies to industries, LPG users have been warned, and rural households may face slower refills if the conflict drags on.
India's petroleum ministry says oil stocks are adequate. But thin LPG and LNG inventories are already showing strain. India is better placed in petrol, diesel and ATF as it exports these fuels. But if disruption in the Gulf - which supplies half of India's crude, 90% of LPG, and most LNG - persists, rationing could spread. Replacing these volumes will be difficult when the world is scrambling for alternatives and most spare production capacity also sits in the Gulf.
No country can fully shield itself from a shock like the strangling of Hormuz. Energy security does not mean self- sufficiency. It means resilience - ability to absorb shocks without immediate economic disruption. In normal times, India has managed supply well, diversifying crude sources, expanding spot purchases and giving refiners greater commercial flexibility.
But diversification has limits. Oil and gas markets remain shaped by a handful of producers, and the heavy concentration of supply in West Asia means disruption near Hormuz affects all buyers. Without buffers, countries are forced into the spot market just as freight, insurance and benchmark prices surge together.
This is where India's preparedness appears thinner. Strategic petroleum reserves were created precisely for such emergencies. Yet, they remain modest and partly filled. Capacity has been stuck at 5.33 mn metric tonnes for nearly a decade. Expansion has been slow, reflecting reluctance to spend on new caverns. It took almost a decade to settle on a PPP model and bring in a private player for a commercial cavern.
By Oct 2024, existing reserves were only about two-thirds full, according to a parliamentary panel. In both 2023- 24 and 2025-26, finance ministry allocated ₹5,000 cr in the Union budget to fill reserves, and later withdrew the provision.
The allocation itself was small. Yet, even this was withdrawn for a sector that has contributed ₹36.9 lakh cr to the exchequer over 5 yrs, including ₹15.7 lakh cr in excise collections by the Centre alone. Similarly, India has studied underground gas storage for years but built none, largely because of cost concerns.
Contrast with China is striking. Beijing has treated stockpiling as a core strategic tool. In 2025, China is estimated to have added between 0.4 and 1.1 mn barrels a day to crude inventories. For context, India's total daily consumption is 5 mn barrels.
China's total crude stocks are estimated at 1.1-1.3 bn barrels, equivalent to 110-140 days of import cover. India's crude stocks on Mar 3, according to a petroleum ministry official, could cover 25 days of consumption. Another 25 days of refined products take the total to 50 days. Last month, oil minister Hardeep Puri told Parliament that the country had oil storage capacity of 74 days. But in a real crisis, it is inventory, not capacity, that counts.
China's stockpiling reflects a strategic judgement that supply shocks are increasingly likely in a turbulent geopolitical environment. Its revised Energy Law, effective Jan 2025, embeds stockpiling obligations in law and introduces 'corporate social responsibility reserves', shifting part of the responsibility to companies. India places no such obligation on its refiners.
India appears to have operated on a different assumption: that global supply would remain ample and choke points would stay open. It worked in stable times. It's being tested now.
Energy security ultimately means buying time - days and weeks to adjust supply chains, manage demand and stabilise markets. The current crisis suggests that while India improved commercial agility, it underinvested in shock absorption.
This view was widely shared. Even when US-Israeli strikes on Iran resumed on Feb 28, many in the industry believed escalation would be contained quickly.
That confidence now looks misplaced. With the strait effectively shut, key export facilities hit, and no clear end to the conflict, supply disruptions are real. Oil and gas flows from the Gulf have stopped. Gas marketers have begun rationing supplies to industries, LPG users have been warned, and rural households may face slower refills if the conflict drags on.
India's petroleum ministry says oil stocks are adequate. But thin LPG and LNG inventories are already showing strain. India is better placed in petrol, diesel and ATF as it exports these fuels. But if disruption in the Gulf - which supplies half of India's crude, 90% of LPG, and most LNG - persists, rationing could spread. Replacing these volumes will be difficult when the world is scrambling for alternatives and most spare production capacity also sits in the Gulf.
No country can fully shield itself from a shock like the strangling of Hormuz. Energy security does not mean self- sufficiency. It means resilience - ability to absorb shocks without immediate economic disruption. In normal times, India has managed supply well, diversifying crude sources, expanding spot purchases and giving refiners greater commercial flexibility.
But diversification has limits. Oil and gas markets remain shaped by a handful of producers, and the heavy concentration of supply in West Asia means disruption near Hormuz affects all buyers. Without buffers, countries are forced into the spot market just as freight, insurance and benchmark prices surge together.
This is where India's preparedness appears thinner. Strategic petroleum reserves were created precisely for such emergencies. Yet, they remain modest and partly filled. Capacity has been stuck at 5.33 mn metric tonnes for nearly a decade. Expansion has been slow, reflecting reluctance to spend on new caverns. It took almost a decade to settle on a PPP model and bring in a private player for a commercial cavern.
By Oct 2024, existing reserves were only about two-thirds full, according to a parliamentary panel. In both 2023- 24 and 2025-26, finance ministry allocated ₹5,000 cr in the Union budget to fill reserves, and later withdrew the provision.
The allocation itself was small. Yet, even this was withdrawn for a sector that has contributed ₹36.9 lakh cr to the exchequer over 5 yrs, including ₹15.7 lakh cr in excise collections by the Centre alone. Similarly, India has studied underground gas storage for years but built none, largely because of cost concerns.
Contrast with China is striking. Beijing has treated stockpiling as a core strategic tool. In 2025, China is estimated to have added between 0.4 and 1.1 mn barrels a day to crude inventories. For context, India's total daily consumption is 5 mn barrels.
China's total crude stocks are estimated at 1.1-1.3 bn barrels, equivalent to 110-140 days of import cover. India's crude stocks on Mar 3, according to a petroleum ministry official, could cover 25 days of consumption. Another 25 days of refined products take the total to 50 days. Last month, oil minister Hardeep Puri told Parliament that the country had oil storage capacity of 74 days. But in a real crisis, it is inventory, not capacity, that counts.
China's stockpiling reflects a strategic judgement that supply shocks are increasingly likely in a turbulent geopolitical environment. Its revised Energy Law, effective Jan 2025, embeds stockpiling obligations in law and introduces 'corporate social responsibility reserves', shifting part of the responsibility to companies. India places no such obligation on its refiners.
India appears to have operated on a different assumption: that global supply would remain ample and choke points would stay open. It worked in stable times. It's being tested now.
Energy security ultimately means buying time - days and weeks to adjust supply chains, manage demand and stabilise markets. The current crisis suggests that while India improved commercial agility, it underinvested in shock absorption.
Sanjeev Choudhary