India is weighing a policy that could require refiners to maintain significantly higher crude oil inventories beyond their current operational stock levels.
Doubling inventory levels to cover around 30 days of demand could require refiners to hold nearly 150 million barrels of crude, potentially costing about ₹60,000 crore in crude purchases alone.
The proposal follows concerns over disruptions in the Strait of Hormuz and highlights India's relatively modest strategic crude reserves compared with countries such as China, the US and Japan.
India Eyes China-Style Oil Stockpiling Plan After Iran War Scare
India is considering a China-style crude stockpiling policy that could require refiners to maintain significantly larger oil inventories as policymakers reassess the country's energy security following recent disruptions in the Strait of Hormuz
Oil and Gas Reserves
Summary
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India is considering a China-style policy that would require domestic refiners to build and maintain significantly larger crude oil inventories to strengthen the country's energy security against future supply disruptions, according to people familiar with the matter, The Economic Times reported.
As per the report, the proposal, which remains at a preliminary stage, comes in the wake of recent concerns over the Strait of Hormuz and the vulnerability of global oil supply chains during the Iran conflict.
Officials are exploring whether refiners should hold additional crude reserves beyond the inventories they currently maintain for operational requirements.
At present, Indian refiners typically hold crude stocks sufficient for around 15 days of operations. Under the proposed framework, refiners could be required to substantially increase those inventories, although the exact stockholding requirement has not yet been finalised and no formal decision has been taken.
According to sources cited by The Economic Times, refiners are expected to resist the proposal due to the significant financial burden associated with building additional storage infrastructure and procuring large volumes of crude oil.
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If refiners are eventually required to hold inventories equivalent to about 30 days of national demand, the industry would need to maintain roughly 150 million barrels of crude oil, based on India's daily consumption of around 5 million barrels.
The cost implications could be substantial. At current crude oil prices and exchange rates, refiners may need to collectively spend nearly ₹60,000 crore on crude purchases alone to double their inventory levels.
Additional investments worth several thousand crore rupees would also be required to construct new storage facilities, a process that could take years to complete.
Industry experts have suggested that any such policy should provide refiners flexibility regarding storage locations and inventory management. According to the report, one source argued that the government should encourage refiners to develop storage facilities near ports, enabling crude inventories to be actively traded in international markets.
The source pointed to Singapore's extensive oil storage infrastructure as a model, noting that its vast tankage network has played a key role in establishing the city-state as Asia's leading oil trading hub.
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The discussion reflects a broader reassessment of India's energy security strategy following the recent disruption in West Asia.
The near-closure of the Strait of Hormuz challenged a long-standing assumption among policymakers that India's proximity to the oil-rich Gulf region reduced the need for large strategic petroleum reserves.
India's strategic crude reserves remain modest compared with other major economies.
According to data from the US Energy Information Administration, India held around 21 million barrels of strategic crude stocks at the end of 2025, compared with 1,397 million barrels in China, 413 million barrels in the United States and 263 million barrels in Japan.
The proposal, if implemented, would mark a significant shift in India's approach to energy security by placing greater responsibility on refiners to maintain larger emergency stockpiles amid an increasingly uncertain geopolitical environment.