As the widening confrontation involving Iran, Israel and the United States threatens energy flows through the Strait of Hormuz, one of the world’s most vital oil corridors, India is quietly rolling out a multi-layered defence which encompasses strategic reserves, diversified imports and emergency gas allocation in a bid to keep its economy powered and household kitchens supplied.
A crisis that exposes India’s energy reality
India imports roughly 90 per cent of its crude oil needs, along with about 60 per cent of LPG and nearly 50 per cent of LNG requirements. These figures are more than mere statistics and reflect the enormous energy appetite of one of the world’s fastest-growing economies and the strategic vulnerabilities that accompany it.That dependence is now under intense scrutiny as the ongoing West Asia crisis threatens supplies passing through the Strait of Hormuz, a narrow maritime artery that carries around one-fifth of the world’s seaborne oil and nearly a third of global LNG shipments.
Following US-Israeli strikes inside Iran and Tehran’s retaliation across the region, maritime traffic through the strait has declined sharply, insurance premiums for tankers have surged, and global energy markets have reacted with volatility.
For India — heavily dependent on energy flows from the Gulf — the crisis has become a real-time stress test of its energy security architecture.
India’s heavy dependence on West Asia
West Asia continues to dominate India’s energy supply chain.
“West Asia remains a critical supplier for India’s energy needs. In 2025, about 48.7 per cent of India’s crude oil imports, 68.4 per cent of its LNG imports and more than 91 per cent of its LPG imports came from the region. This high concentration exposes the Indian economy to sudden supply shocks,” notes the Global Trade Research Initiative (GTRI) in its latest report.
The situation highlights a structural vulnerability: when geopolitical tensions choke the Hormuz route, India’s supply chain can feel the shock almost immediately.
Strategic reserves offer India its first line of defence
Over the past decade, India has quietly strengthened its strategic petroleum reserves (SPR) — underground caverns designed to store emergency crude supplies.
The country currently has 5.33 million tonnes of crude storage capacity in underground facilities at Visakhapatnam, Mangaluru and Padur, equivalent to roughly 40 million barrels or about 9–10 days of national demand. Around 80 per cent of this capacity is currently filled.
Alongside the strategic stockpile, India maintains commercial reserves held by oil marketing companies.
According to government data:
Crude oil stocks: around 25 days of consumptionPetrol and diesel: another 25 days of coverCooking gas: around 25–30 days of supplyLNG inventories: roughly 10 daysSourav Mitra, Partner – Oil & Gas at Grant Thornton Bharat, believes India’s preparations have quietly transformed the country’s resilience.
“Price volatility may be unavoidable – but the era of sudden physical shortages is steadily receding.”
Cargo-tracking data also indicate that India currently has nearly 100 million barrels of commercial crude available or in transit, enough to support imports for another 40–45 days if Hormuz shipments are disrupted.
“The immediate threat, in short, is not scarcity but cost,” says Mitra.
LPG supplies strengthened, LNG remains the weak spot
India has also taken steps to strengthen its cooking gas security.
Two underground LPG storage caverns — at Visakhapatnam and Mangaluru — now act as strategic anchors on the country’s eastern and western coasts.
The HPCL Mangalore cavern, commissioned in September 2025, has lifted underground LPG storage capacity to around 140,000 tonnes.
But experts warn that natural gas remains the most vulnerable link in India’s energy chain.
“While India has eight LNG import terminals, it lacks a formal gas strategic reserve. Policymakers are now considering a practical workaround: earmarking a small, government-callable buffer within existing LNG tanks to manage supply or price shocks,” says Mitra.
A proposal is currently under discussion to mandate a 10 per cent strategic LNG buffer across terminals, creating a quick and relatively low-cost emergency gas reserve.
Emergency gas allocation: Protecting kitchens and transport
As LNG shipments face disruptions, the government has already taken emergency steps to protect critical energy supplies.
In a late-night gazette notification, the government revised the priority allocation of domestically produced natural gas, placing LPG production alongside CNG and piped household gas as top priority sectors.
Under the new rules:
LPG producers, CNG suppliers and piped household gas distributors will receive 100 per cent of their average gas consumption over the past six months.
Fertiliser plants will receive at least 70 per cent of their average past demand.
Tea industries, manufacturing and industrial consumers will receive around 80 per cent, subject to operational availability.
City gas distributors serving commercial and industrial consumers will also receive 80 per cent allocations.
The diversion will be achieved by curtailing supplies to petrochemical plants, refineries, power units and high-priced gas consumers.
Domestic production currently meets about half of India’s daily gas consumption of 191 million standard cubic metres, making careful allocation critical during disruptions.
“The Central Government has assessed that the ongoing conflict in the Middle East has resulted in the disruption of liquefied natural gas (LNG) shipments through the Strait of Hormuz and suppliers have invoked force majeure clause,” the notification said.
Strategic expansion plans in the pipeline
India is already planning a major expansion of its strategic reserves.
The second phase of the Strategic Petroleum Reserve programme will add new facilities at Chandikhol and Padur-II.
Once operational, the country’s strategic crude capacity will rise from 5.33 million tonnes to 11.83 million tonnes, potentially doubling emergency coverage.
“India can benefit further from acceleration of strategic expansion for Phase II that shall raise the strategic petroleum reserves to 11.83 MMT (which is an additional 17 – 18 days buffer); a separate feasibility study for six new strategic petroleum reserve locations is also underway for the next set,” says Gaurav Moda of EY-Parthenon India.
However, delays in land acquisition mean commissioning may occur later in the decade.
Building a stronger LNG strategy
Experts argue that India must move beyond simple import arrangements and develop a more integrated gas ecosystem.
Mitra calls for a shift from an LNG “strategy” to an LNG “architecture”.
“The recent Qatar–Hormuz shock reminded us that contracts and terminals are necessary, but real resilience comes from owning, moving and trading molecules as well,” he says.
Key recommendations include:
Diversifying India’s LNG supply beyond Hormuz-dependent sourcesSecuring equity stakes in overseas gas projectsExpanding LNG trading and shipping capabilitiesNotifying the proposed 10 per cent LNG bufferBuilding underground gas storage capacity
The Russia factor in India’s LNG calculus
Another solution being debated is deeper energy ties with Russia.
Ajay Srivastava, founder of the Global Trade Research Initiative, argues that sustained Russian imports could stabilise India’s energy supply.
“Had India continued importing Russian oil at earlier levels – when it made up 35 per cent of our crude imports – today’s energy concerns would likely be far less severe. India’s alternative supply options remain limited,” he says.
Although imports from the United States rose 82 per cent to $9.8 billion in 2025, the US itself runs a net crude deficit, limiting long-term export capacity.
“West African and Latin American crude supplies involve higher freight costs and longer shipping times. Long-term contracts with Russia would provide India with stable volumes, predictable pricing and a stronger buffer against global market volatility,” Srivastava added.
Preparing for the next shock
Experts say the Hormuz crisis should serve as a wake-up call.
Countries such as Japan and China maintain energy buffers that can last six months or more, far above India’s current reserves.
“Countries like Japan and China have taken a larger view on such buffers to typically average 6 months plus in comparison,” said Moda.
In the long term, analysts argue that India may need a three-layer strategic reserves framework — combining government stockpiles, private storage mandates and overseas joint stockpiling.
“In the long term, India may further strengthen and diversify its growth agenda through energy security via a three-pronged strategic reserves framework similar to Japan, with a combination of national reserves, private storage mandates and joint stockpiling abroad at source,” Moda concludes.
Cost pressures may come before shortages
For now, India appears insulated from an immediate supply crunch. Strategic reserves, commercial stocks and cargoes already in transit provide a reasonable safety net.
But the Hormuz crisis has highlighted a deeper reality: in a world where geopolitics increasingly shapes energy flows, energy security is no longer just about supply — it is about resilience.
(With inputs from TOI)
