Taking lessons from China: Why India may ask refiners to maintain significantly larger crude oil inventories
Drawing lessons from China, India may look to push its domestic refiners to increase the stockpile of crude inventories with energy security in mind. India is reported;y considering a policy modelled on practices followed by China that would require domestic oil refiners to maintain substantially larger crude oil reserves as a safeguard against future supply shocks. The thought process comes in the wake of disruptions caused by the US- Iran conflict.
The disruption to shipping through the Strait of Hormuz has challenged a long-standing belief among Indian policymakers that the country's proximity to the crude-rich Persian Gulf reduced the need for large strategic petroleum reserves .
Data from the US Energy Information Administration shows that, at the end of 2025, India held about 21 million barrels of strategic crude reserves, compared with 1,397 million barrels in China, 413 million barrels in the US and 263 million barrels in Japan.
India’s big plan for crude oil stocks
Under the proposal, refiners would be asked to hold inventories beyond the roughly 15 days of crude oil they currently keep for routine operational requirements, according to an ET report.
The idea remains at an early stage, and several aspects of the plan are still being worked out. People aware of the matter said no final decision has yet been made on whether or how the proposal will be implemented.
Industry participants are expected to resist the move because of the significant investment required to build additional storage capacity and procure the extra crude needed to fill those facilities, one of the people said.
Also Read | US-Iran peace deal: What opening of Strait of Hormuz would mean for India’s crude oil supplies
If refiners are ultimately required to raise their stock levels to cover about 30 days of national consumption, they would collectively need to maintain around 150 million barrels of crude oil, based on India's daily demand of approximately 5 million barrels.
The disruption to shipping through the Strait of Hormuz has challenged a long-standing belief among Indian policymakers that the country's proximity to the crude-rich Persian Gulf reduced the need for large strategic petroleum reserves .
Data from the US Energy Information Administration shows that, at the end of 2025, India held about 21 million barrels of strategic crude reserves, compared with 1,397 million barrels in China, 413 million barrels in the US and 263 million barrels in Japan.
India’s big plan for crude oil stocks
Under the proposal, refiners would be asked to hold inventories beyond the roughly 15 days of crude oil they currently keep for routine operational requirements, according to an ET report.
The idea remains at an early stage, and several aspects of the plan are still being worked out. People aware of the matter said no final decision has yet been made on whether or how the proposal will be implemented.
Industry participants are expected to resist the move because of the significant investment required to build additional storage capacity and procure the extra crude needed to fill those facilities, one of the people said.
Also Read | US-Iran peace deal: What opening of Strait of Hormuz would mean for India’s crude oil supplies
If refiners are ultimately required to raise their stock levels to cover about 30 days of national consumption, they would collectively need to maintain around 150 million barrels of crude oil, based on India's daily demand of approximately 5 million barrels.
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