India's Oil Reserves Amid Conflict

Summary of Key Facts and Data:

1. Current Oil and Gas Stocks:

   • India has crude oil and fuel stocks sufficient for 6 to 8 weeks.
   • Indian refiners have crude oil stocks to last approximately 25 days, including oil in storage and transit.
   • Strategic petroleum reserves hold crude worth an additional week of consumption (5.6 million bpd).

2. Supply Challenges:

   • Ongoing military conflict in West Asia (Israel and US strikes on Iran) has halted shipments through the crucial Strait of Hormuz.
   • This waterway is pivotal as approximately 50% of India’s crude imports (2.5–2.7 million bpd) transit through there.
   • Majority of India's gas consumption is met through imports, with LNG from Qatar and the UAE, constituting vital energy supplies.

3. Government Actions:

   • Ministry of Petroleum and Natural Gas (MoPNG) monitors the situation closely and ensures energy availability.
   • A 24×7 Control Room is established by the MoPNG to monitor petroleum supply and stock positions.
   • The government is exploring alternative supply sources and accelerating spot procurement from regions not reliant on Hormuz (e.g., Russia, the US, West Africa).
   • Diversification options being pursued include increased sourcing from non-Gulf producers and potential domestic increases in LPG production.

4. Vulnerability in LNG and LPG:

   • India’s significant dependency on LNG and LPG makes it vulnerable to disruptions, unlike the more stable crude oil stockpiles.
   • Both fuels' supply logistics are sensitive, with almost 80% of LPG imports routed through Hormuz.
   • MoPNG indicated that if necessary, domestic refineries could scale up LPG production and rationalize supplies to industries that can use alternative fuels.

5. International Context:

   • The conflict has led to a spike in international prices of crude oil and LNG due to jeopardized supply lines through the Strait.
   • The government's stance indicates a cautious optimism for managing supply impacts, but they are prepared for measures if disruptions persist.

6. Energy Import Dependency:

   • India is the world's third-largest consumer of crude oil with an import dependency exceeding 88%.
   • Half of India's natural gas needs are met through LNG imports, with significant reliance on imports from West Asia for both LNG and LPG.

7. Economic Implications:

   • Should supply disruptions continue, India may face higher energy prices due to increased sourcing from alternative markets to mitigate the short-term impacts of the conflict.
   • The impact of the West Asia crisis will depend on the duration of supply interruptions through the Strait of Hormuz.

Conclusion: India's oil and gas supply system is under scrutiny due to recent geopolitical tensions. While it currently exhibits resiliency, ongoing monitoring and strategic sourcing adjustments remain vital to addressing potential energy shortages or price spikes stemming from conflict in West Asia.