Strategic reserves must define India’s energy reset

Diversifying import sources without improving home reserves may prove an insufficient strategy.

The Indian government has maintained a reasonably calm approach towards the disruptions in crude oil and natural gas imports caused by the ongoing war between the United States, Israel, and Iran. Prime Minister Narendra Modi’s statements in the Lok Sabha and the Rajya Sabha last week summarised the evolving situation.

He noted that the war negatively impacted the global economy and its effects would linger. However, the crisis has highlighted the vulnerabilities in India’s oil and natural gas supply lines. As remedial measures, the Prime Minister indicated diversifying oil and natural gas sources from 27 to 41 countries and increasing the production and blending of ethanol, which promises to lessen the country’s dependence on imported crude oil. A critical assessment of the situation is not out of place. The government would say it is the right time to discuss the issues, but vulnerabilities only come to light during a crisis.

Take the issue of the strategic petroleum reserves (SPR). In a written reply to a question in the Rajya Sabha, Minister of State for Petroleum and Natural Gas Suresh Gopi informed the House that of the 5.33 million metric tonnes capacity, the existing buffer is 3.37 million metric tonnes. Even at full capacity, the reserves would last only 9.5 days. However, the picture improves when the reserves of the oil marketing companies are included, which raises the reserve capacity to 74 days.

We should ask why the government’s reserves are at 64% of their capacity. Governments usually follow the policy of ‘don’t ask, don’t tell’. The minister referred to the stated plans to expand the strategic reserves’ capacity by an additional 6.5 million metric tonnes. That is, the total capacity would rise to about 11.8 million metric tonnes. The expansion plan was finalised in July 2021, but progress has been limited.

Is this the time to press the government for answers on sensitive issues? Yes, because energy security, and consequently the SPR, are matters demanding urgent attention. According to estimates, the US has the largest reserves of 740 million barrels, and China is estimated to have 400 to 900 million barrels. Two other major countries with large strategic reserves are Japan and South Korea, with about 500 million and 200 million barrels, respectively. Irrespective of the West Asia war, the need for enhanced strategic reserve capacities was real. India’s existing SPR capacity is about 39.36 million barrels. This is set to more than double, reaching about 86.49 million barrels, but only after the expansion programme is completed.

One of the possible reasons for overlooking the need to maintain and expand strategic reserves could be the availability of Russian crude imports at a discounted price. Russia’s share in India’s crude oil imports has remained around 35%; it fell from 36.5% in 2024 to 31.5% in 2025. But it peaked again to 35% in November 2025. The presence of the US as a source of crude oil imports has added a layer to India’s import landscape. In November 2025, the US’ share in India’s crude imports touched a high of 12.6% from 4.2% in October 2025 and 5.1% in November 2024. Easing sanctions on Russian and Iranian crude could further increase India’s comfort level for oil imports. However, it has also been noticed that India’s dependence on imports is increasing.

When India has a choice in importing from multiple sources, it makes sense to shore up its strategic reserves and increase its storage capacity to optimal levels. This requires a long-term view of the oil market, looking beyond the fluctuating price levels.

The transition will be long

The government’s long-term thinking seems to be focused on increasing the share of renewable energy sources, such as solar, wind, and nuclear. It is pursuing this objective while proportionately decreasing its precarious dependence on oil and natural gas imports. But there is no easy way
to switch from dependence on fossil fuels to renewable sources.

There are issues involving technology and costs to which no easy solutions can be found. The growing share of renewables in India’s installed capacity must now translate into everyday applications. This is achievable only by making these sources more user-friendly. Coal, the old dependable, appears to be a ready alternative, at least as a medium-term option, while the oil prices stabilise.

Managing the energy basket despite the diversity of sources requires tact and informed strategic management. The temptation to grab the easy options remains irresistible. If crude oil and natural gas supplies from the Gulf states run into trouble in the aftermath of the war, the alternative is to turn to the Russian and American sources. 

But these still provide temporary relief. As power demands rise in tandem with the economy, amid increasing climate tensions, the need for assured energy supplies becomes critical. The current churn will take time to settle, but the existing uncertainties should not distract India from its major energy imperative: building robust strategic petroleum reserves, until it enters the ideal world of low carbon and renewables.

(The writer is a Delhi-based journalist and commentator)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.