India's Crude Oil Reserves Reach 50-Day Supply Amid Tensions Over Strait of Hormuz

India Prepares for Potential Oil Supply Disruptions

Key Highlights

• India has 50 days of crude oil and products stock, positioning the country comfortably amidst the escalating conflict in West Asia.
• 40% of India's total monthly oil imports pass through the Strait of Hormuz, a key passage between the Persian Gulf and the Gulf of Oman, putting India's oil supplies at risk.
• 1.04 million barrels per day of Russian oil imports were recorded in February, with analysts expecting Indian refiners to turn back to Russian oil supplies if access to West Asian grades tighten.

Contingency Planning

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The Ministry of Petroleum and Natural Gas has concluded multiple meetings with Indian companies to take stock of the situation and chart contingency plans, including alternative regions for crude oil supply. The government is exploring options to diversify sourcing and is confident in its ability to address potential shortages.

Oil Price Outlook

Brent crude oil prices have risen to $82 per barrel on March 3, up from $72 per barrel on February 27, due to the escalating conflict in the Gulf. The government and analysts expect crude oil prices to further increase if the conflict is prolonged.

LPG Flows and Diversification

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The escalating tensions in West Asia have pressured India's LPG flows, with 80-85% of its LPG needs sourced from Gulf suppliers, almost entirely transiting via the Strait of Hormuz. The government has increased LPG sourcing from the UAE, Norway, the USA, and Saudi Arabia, and has the option to increase domestic output in case of restricted flows.

LNG Imports

India's largest LNG supplier, Qatar, has stopped production at its world's largest export facility due to an Iranian drone attack. If the Qatar facility doesn't reopen, the government will address the issue, as India has 25-30 days of LPG stock and is prepared to scout for alternative options.