India has enough oil stock to weather West Asia crisis; coverage in place for 6-8 weeks

New Delhi, Mar 3: India holds sufficient crude and fuel inventories to meet domestic demand for petrol, diesel, and other fuels for six to eight weeks, top government sources said, cushioning the country against any short-term supply disruption amid escalating military conflict in West Asia.

About half of India's crude and LPG imports transit the Strait of Hormuz - the key energy chokepoint that has seen disruptions following US and Israeli attacks on Iranian government, military and nuclear facilities. Iran warned shipping away from the strait, and insurers withdrew coverage, effectively halting tanker movements.

A top oil ministry official, who wished not to be named, said the government is monitoring the situation "on a daily and hourly basis" and is confident of navigating through the crisis that by some estimates may last a week or ten days.

While the country has crude oil stocks to last 25 days and fuel to last a similar duration, contingency plans - including using stockpile in strategic petroleum reserves, commercial stocks, and diversified sourcing from the US, Russia, West Africa, and Latin America - will ensure continuity even if the crisis lasts longer.

While immediate shortages are unlikely, rising crude prices and higher freight and insurance costs could impact India's import bill and inflation.

Separately, the ministry in a statement said Oil Minister Hardeep Singh Puri "briefed the media on the country's preparedness in the current circumstances" and it was informed that "the country is well stocked with crude oil and inventories of key petroleum products including petrol, diesel and ATF to deal with short-term disruptions arising from the Middle East."

It, however, did not give details of the stocks.

"The Ministry has established a 24×7 control room to continuously monitor the supply and stock position of petroleum products across the country," it said.

"At present, the government is reasonably comfortable in terms of stocks. Safeguarding the interests of Indian consumers remains the highest priority. Based on continuous monitoring, the government is cautiously optimistic that phased measures can be taken, if required, to further mitigate the situation." India is the third largest importer, fourth largest refiner, and fifth largest exporter of petroleum products globally.

"It was further apprised that in the last few years, India has ensured both availability and affordability of energy for its population by diversifying its sources. Indian energy companies now have access to energy supplies that are not routed through the Strait of Hormuz.

"Such cargoes will remain available and help mitigate supplies that may be temporarily affected enroute through the Strait of Hormuz," the statement said.

The official said that while this year crude sourced from the countries that use the Strait of Hormuz is above 50 per cent due to a drop in Russian cargoes, the average over the past couple of years has been 40 per cent. The remaining 60 per cent is not shipped from the Strait.

Crude oil -- the raw material that is turned into fuels like petrol and diesel in refineries -- in storage tanks, pipelines and on ships in transit is enough to meet the country's requirement for 25 days. Besides, there are stock of fuel in refineries, deposits, pipelines and other storage facilities that could meet demand for a similar duration, he said.

On top of this, there is crude oil stored in underground strategic reserves.

The country's commercial crude oil stocks, including strategic petroleum reserves at Mangalore, Padur, and Visakhapatnam, total around 100 million barrels. This, along with additional refined product inventories, provides a substantial buffer against short-term disruptions.

"We are in a reasonably comfortable situation," the official said.

The official said India was looking to import LPG even before the Iran crisis broke out last weekend. An issue with the pipeline in Saudi Arabia, the principal supplier of LPG to India, had created a deficit of 120,000 tonnes.

"There are a large number of producers, and we are tapping them," the official said.

With imports via the Strait of Hormuz averaging roughly 2.5 million barrels per day -- about half of India's just over 5 million bpd total crude imports -- these combined reserves could theoretically cover around 40-45 days of imports in a crude disruption scenario, he said.