Explained | After Khamenei’s Death And Hormuz Tensions, Why India’s Oil Safety Net Comes Into Sharp Focus
After Ayatollah Ali Khamenei’s death and tanker tensions near the Strait of Hormuz, India’s strategic oil reserves emerge as a critical economic shock absorber.
Published : March 1, 2026 at 6:39 PM IST
New Delhi: The death of Iran’s Supreme Leader Ayatollah Ali Khamenei in a US–Israeli strike Saturday has pushed West Asia into its most volatile phase in decades, with fears of a wider regional war growing by the day. Those anxieties intensified after Oman reported Sunday that one of its oil tankers had been attacked near the strategically critical Strait of Hormuz, the narrow artery through which nearly a fifth of the world’s oil passes.
For India, which depends heavily on crude imports routed through these waters, the crisis has brought renewed focus on its Strategic Petroleum Reserves (SPRs). India is one of the world’s largest crude oil importers, meeting around 80-90 per cent of its consumption through imports. A significant share of these shipments of monthly crude flows transit through the Strait of Hormuz.
The reported attack on an Omani oil tanker near the Strait of Hormuz has sharpened fears that the world’s most vital energy corridor could become a battleground. For India, whose energy lifeline runs through these contested waters, the turmoil has elevated the significance of its SPRs from a long-term precaution to an immediate economic safeguard.
What is an SPR and when was this conceived?
The US’ SPR, the world’s largest supply of emergency crude oil was established primarily to reduce the impact of disruptions in supplies of petroleum products and to carry out obligations of Washington under the international energy programme. The federally-owned oil stocks are stored in huge underground salt caverns at four sites along the coastline of the Gulf of America. The sheer size of the SPR (reportedly, authorised storage capacity of 714 million barrels) makes it a significant deterrent to oil import cutoffs and a key tool in foreign policy.
SPR oil is sold competitively when the US president finds, pursuant to the conditions set forth in the Energy Policy and Conservation Act (EPCA), that a sale is required. Historically, the president has authorised emergency releases from the SPR on four occasions.
Why did India decide to start its own SPRs?
The idea of creating an SPR in India dates back to the 1991 Gulf War, when Iraq’s invasion of Kuwait disrupted global oil supplies and caused sharp price increases. At that time, India faced a severe balance-of-payments crisis and had foreign exchange reserves sufficient for only a few weeks of imports. The oil shock highlighted the country’s vulnerability to geopolitical events in West Asia.
This crisis planted the seed for a long-term energy security strategy, though implementation would take more than a decade.
The proposal for a formal SPR gained momentum in the early 2000s. In 1998, the government set up a committee to examine the feasibility of building emergency oil reserves. The recommendation was to create storage equivalent to at least 90 days of imports, in line with international energy security norms.
In 2004, the Government of India formally approved the construction of underground crude oil storage facilities as Phase I of the SPR programme. To implement the project, the Indian Strategic Petroleum Reserves Limited (ISPRL) was incorporated in 2006.
Where are India’s SPRs located?
India’s SPRs are located at three locations: Visakhapatnam, Mangalore and Padur (near Udupi). These strategic storages are in addition to the existing storages of crude oil and petroleum products with the oil companies and can serve as a cushion during any supply disruptions. The construction of the SPR facilities is being managed by the ISPRL which is a wholly owned subsidiary of Oil Industry Development Board (OIDB) under the Ministry of Petroleum and Natural Gas.
The crude oil storages are constructed in underground rock caverns and are located on the east and west coasts of India. Crude oil from these caverns can be supplied to Indian refineries either through pipelines or through a combination of pipelines and coastal movement. Underground rock caverns are considered as the safest means of storing hydrocarbons.
What are the capacities of India’s SPRs?
As of now, India’s SPR network’s total installed capacity is 5.33 MMT. This includes 1.33 MMT in Visakhapatnam, 1.50 MMT in Mangaluru, and 2.50 MMT in Padur. Together, these facilities roughly provide enough to meet about nine to 10 days of India’s total oil consumption if used in isolation.
Typically, these strategic oil stocks are used only during significant supply shocks and are separate from the commercial inventories held by oil refiners and companies. When SPR capacity is combined with stocks held at refineries and in floating storage, India’s total oil inventory is estimated at around 74 days of net import requirement — a broader measure of energy security that includes all available supplies.
Recognising the continuing risks from geopolitical disruptions and rising energy demand, the Government of India has undertaken an ambitious Phase II expansion plan to significantly broaden SPR capacity. Under this plan, the government has approved the construction of additional commercial-cum-strategic oil reserve facilities at Chandikhol in Odisha (4 MMT) and the expansion of the Padur facility (2.5 MMT)
Together, these new sites will add 6.5 MMT of capacity under Phase II. When combined with the existing 5.33 MMT, this would take total SPR capacity to nearly 11.83 MMT of crude oil.
Why does the current West Asia conflict heighten the importance of India’s SPRs?
The Strait of Hormuz handles roughly 20 per cent of global oil and LNG shipments. Even short-lived disruptions or heightened risk perceptions can cause sharp price increases. India imports nearly 2.6 million barrels per day of crude through this route, and any interruption could mean immediate supply tightness or elevated costs.
In such scenarios, drawing on SPRs allows India to maintain refinery operations and domestic fuel supplies while alternate sources or routes are arranged. This can also mitigate short-term price spikes in international crude benchmarks, which would otherwise feed into inflation and economic stress.
While India has been diversifying crude sources by increasing imports from Russia and the US, and relying less on Gulf flows, such diversification takes time and depends on global logistics and pricing. Strategic reserves act as an immediate stabiliser while longer-term diversification strategies take time. India’s SPRs have evolved from a modest emergency buffer to an expanding set of energy security infrastructure with national and global significance.
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