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India Plans Strategic Fuel Reserves After Iran War Shock

Bloomberg Markets •
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India is building strategic fuel reserves of crude oil, LPG, and LNG to cover up to a month of domestic demand, aiming to prevent supply disruptions like those during the Persian Gulf crisis. The plan follows a review exposing limits in existing stockpiles and comes after the Iran conflict exposed heavy dependence on Middle East energy imports.

The oil ministry has formed a committee to study storage locations and models, according to officials. Current crude reserves of 39 million barrels cover just eight days of imports, far below China's levels. The expansion targets 120 million barrels of storage capacity within five years, more than doubling existing reserves. Underground facilities on India's coasts will support this growth.

LPG and LNG reserves lag significantly. India's LPG storage of 140,000 tons meets roughly two days of demand, while no strategic LNG reserves exist. During the Iran crisis, India rationed fuels and sought assistance from Japan and South Korea. The government has directed state refiners to boost emergency LPG stockpiles.

This initiative mirrors regional efforts by Singapore, Taiwan, and Pakistan to strengthen energy security. Japan and India may cooperate on LNG stockpiles, with leaders planning talks this week. The move represents India's most ambitious attempt to insulate from future supply shocks.