India plans to add strategic fuel reserves after Iran war shock

The Ministry of Petroleum and Natural Gas has constituted a committee to examine the expansion of India's Strategic Petroleum Reserves (SPR), prompted by sup...

What Happened

The Ministry of Petroleum and Natural Gas has constituted a committee to examine the expansion of India's Strategic Petroleum Reserves (SPR), prompted by supply disruptions during the US-Iran conflict in 2026.
The committee is tasked with identifying potential new storage locations, evaluating operating models, and determining the appropriate split between overground and underground storage facilities.
India's existing SPR at three underground cavern locations currently holds approximately 3.37 million metric tonnes (MMT) of crude oil — equivalent to roughly 9.5 days of national consumption.
A Parliamentary Standing Committee on Petroleum and Natural Gas had, in its March 2026 report, urged the government to scale up reserves to cover 90 days of national requirement — in line with International Energy Agency (IEA) norms.
The Iran conflict demonstrated India's vulnerability: despite not suffering a single dry retail outlet, the near-disruption of the Strait of Hormuz forced emergency fuel rationing measures (the June 12 ECA order) and accelerated the push for deeper reserve buffers.

Static Topic Bridges

India's Strategic Petroleum Reserves — Current Infrastructure

India's strategic petroleum reserve programme is managed by Indian Strategic Petroleum Reserves Limited (ISPRL), a special purpose vehicle under the Ministry of Petroleum and Natural Gas. The reserves are stored in underground rock caverns, which are more secure, cost-effective for long-term storage, and resistant to conventional threats than overground tankage.

Three operational underground storage locations: Visakhapatnam, Andhra Pradesh (1.33 MMT); Mangaluru, Karnataka (1.5 MMT); Padur, Udupi district, Karnataka (2.5 MMT).
Total SPR capacity: 5.33 MMT; stored volume as of mid-2026: ~3.37 MMT (~64% utilisation).
SPR covers ~9.5 days of national crude consumption; combined with commercial inventories held by refineries (~64.5 days), total crude cover is ~74 days.
SPR reserves are released only during genuine supply emergencies; India released a portion of its reserves for the first time in November 2021 in a coordinated action with the United States and other IEA members.

Connection to this news: The Iran shock exposed the inadequacy of a 9.5-day strategic buffer; the committee's mandate to expand reserves reflects a policy shift towards building strategic depth comparable to IEA norms.

IEA Norms and India's Energy Security Gap

The International Energy Agency (IEA), of which India became an Associate Member in 2017, recommends that member and associate countries maintain emergency oil stocks equivalent to at least 90 days of net imports. This norm exists to buffer against price spikes and supply shocks.

India's current SPR covers ~9.5 days of consumption, far below the 90-day IEA benchmark.
Even including commercial inventories (~74 days total cover), India falls short of the recommended level.
Phase II expansion plans include new facilities at Chandikhol (Odisha) and an expanded Padur, plus India's first salt cavern-based reserve in Bikaner, Rajasthan (proposed capacity: 5 MMT).
A 1.75 MMT expansion at Mangaluru and a new facility at Bina, Madhya Pradesh are also under consideration.

Connection to this news: The committee formed by the oil ministry is expected to accelerate Phase II planning and potentially recommend additional Phase III locations, closing India's gap with IEA norms.

Underground vs. Overground Storage — Trade-offs

The choice between underground rock cavern storage and overground above-ground storage tanks (ASTs) involves trade-offs across cost, security, maintenance, and scalability.

Underground rock cavern storage (as at Visakhapatnam, Mangaluru, Padur): Lower operating cost over a long lifecycle; impervious to aerial attack; no evaporation losses; ideal for crude oil storage; requires specific geology (hard rock or salt domes).
Overground above-ground tanks: Faster to build; more flexible location choices; higher operating cost; vulnerable to sabotage or aerial threats; better suited for refined product storage.
Salt cavern storage (proposed at Bikaner): A third modality — solution-mined from salt deposits; lower construction cost than hard rock caverns; India has no operational salt cavern SPR yet.
The committee's mandate to examine the "division between overground and underground storage" suggests a hybrid strategy for the expanded reserve.

Connection to this news: The Iran conflict demonstrated that underground caverns (India's existing model) are best suited for crude storage, but the committee may recommend overground refined product reserves nearer consumption centres for faster emergency drawdown.

India's Crude Oil Import Dependence and Strait of Hormuz Exposure

India imports over 85% of its crude oil requirements, making it the world's third-largest oil importer. A significant share of these imports transit the Strait of Hormuz, the narrow waterway connecting the Persian Gulf to the Arabian Sea — a critical chokepoint for global energy flows.

India imports crude from over 40 countries; after active diversification (accelerated by the Iran conflict), approximately 70% of crude imports now arrive from outside the Strait of Hormuz.
The remaining ~30% of crude and ~90% of LPG imports still pass through the Strait, maintaining significant residual vulnerability.
India is the second-largest country by volume of crude flows through the Strait of Hormuz (14.7% of total flows).
The March 2026 government report confirmed that retail fuel outlets did not run dry during the Iran conflict, crediting emergency rationing measures and accelerated diversification of crude sources.

Connection to this news: The Hormuz vulnerability is the direct geopolitical rationale for expanding the SPR — a larger buffer reduces the risk of civilian supply disruption during future West Asia crises.

Key Facts & Data

ISPRL manages India's SPR under the Ministry of Petroleum and Natural Gas.
Three storage caverns: Visakhapatnam (1.33 MMT), Mangaluru (1.5 MMT), Padur (2.5 MMT) — total 5.33 MMT.
Current SPR coverage: ~9.5 days of national consumption; combined reserve cover (including commercial): ~74 days.
IEA benchmark: 90 days of net imports.
Phase II planned locations: Chandikhol (Odisha), expanded Padur, Bikaner salt cavern (5 MMT proposed), expanded Mangaluru (+1.75 MMT), Bina (Madhya Pradesh).
India became an IEA Associate Member in 2017.
~70% of crude imports now outside Strait of Hormuz (up from ~50% before the Iran conflict).
India is the world's third-largest crude oil importer, importing 85%+ of its requirements.