Global Oil Dynamics & India’s Energy Security

Relevance: GS Paper III — Indian Economy (Energy security); GS Paper II — International Relations

Source: Ministry of Petroleum & Natural Gas / International Energy Agency, 2026

1 · Context

The closure of the Strait of Hormuz amid the West Asia conflict has tightened global crude oil flows. A larger crisis for India has been averted only because China — the world’s largest crude importer — has sharply cut its purchases, freeing up barrels from Russia, West Africa and the Atlantic Basin for Indian refiners.

2 · India’s Strategic Petroleum Reserves (SPR)

FIVE SPR SITES · UNDERGROUND ROCK CAVERNS

PHASE I (existing) — total 5.33 MMT

Visakhapatnam (Andhra Pradesh) · 1.33 MMT  ·  East Coast

Mangaluru (Karnataka) · 1.50 MMT  ·  West Coast

Padur (Karnataka) · 2.50 MMT  ·  West Coast

 

PHASE II (planned, Public-Private Partnership) — total 6.50 MMT

Chandikhol (Odisha) · 4.00 MMT  ·  East Coast

Padur expansion (Karnataka) · 2.50 MMT  ·  West Coast

 

Combined target: 11.83 MMT. Managed by Indian Strategic Petroleum Reserves Limited (ISPRL) under the Ministry of Petroleum & Natural Gas.

3 · India’s oil vulnerabilities — by the numbers

• Third-largest consumer of crude oil globally; imports meet over 88% of demand.
• 40–50% of India’s oil imports passed through the Strait of Hormuz before the West Asia disruption.
• $135 billion — India’s oil import bill in 2025-26 (the country’s largest single import).
• Rule of thumb: a $1-per-barrel rise adds about $2 billion to the annual import bill; a 10% spike widens the Current Account Deficit (CAD) by 0.4% of GDP.

4 · Reserves and the international benchmark

• SPR storage: oil is held in underground rock caverns; Phase II is being built on a Public-Private Partnership (PPP) model.
• Current cover: dedicated SPRs are about 64% full, giving only ~5 days of emergency cover; combined commercial and SPR stocks give about 74 days.
• International Energy Agency (IEA): recommends that member and associate countries hold emergency reserves equal to at least 90 days of net imports.

5 · Demand-side strategy

• National Green Hydrogen Mission — shift industry and transport to green fuel.
• PM E-DRIVE — accelerated electric-vehicle transition.
• Ethanol Blending Programme — reduce petrol demand by blending with ethanol.

VALUE BOX · QUICK REVISION Phase I SPR (5.33 MMT): Visakhapatnam (AP) · Mangaluru & Padur (Karnataka). Phase II SPR (6.5 MMT, PPP): Chandikhol (Odisha) · Padur expansion (Karnataka). Managed by: ISPRL, under the Ministry of Petroleum & Natural Gas. 88%: India’s crude oil import dependency. IEA benchmark: 90 days of net imports; India has ~74 days combined cover. Hormuz traffic (2025): ~15 mbd, about 34% of global crude trade.

MCQ · PRELIMS PRACTICE

Consider the following statements regarding India’s Strategic Petroleum Reserves (SPR):

1. Indian Strategic Petroleum Reserves Limited (ISPRL), which manages India’s SPR facilities, functions under the Ministry of Petroleum and Natural Gas.
2. The Phase I Strategic Petroleum Reserves are located at Visakhapatnam in Andhra Pradesh, Mangaluru in Kerala, and Padur in Karnataka.
3. The International Energy Agency (IEA) recommends that member and associate countries maintain emergency oil reserves equivalent to at least 90 days of net imports.

Which of the statements given above are correct?

(a) 1 and 2 only	(b) 2 and 3 only
(c) 1 and 3 only	(d) 1, 2 and 3

Answer: (c) 1 and 3 only

Statement 1 — Correct. ISPRL is a wholly-owned subsidiary of the Oil Industry Development Board and functions under the Ministry of Petroleum and Natural Gas.

Statement 2 — Incorrect (the trap). Mangaluru is in Karnataka, not Kerala. All three Phase I SPR sites are on the southern coast — Visakhapatnam in Andhra Pradesh, and both Mangaluru and Padur in Karnataka.

Statement 3 — Correct. The IEA recommends emergency reserves of at least 90 days of net imports. India’s combined commercial and strategic stocks currently cover about 74 days.