When tensions rose again around the Strait of Hormuz, the first fear in India was familiar: would petrol pumps run dry, LPG supplies tighten and airfares rise as crude flows were disrupted? India imports more than 88% of its crude requirement, and nearly 40% of those imports pass through Hormuz. Yet the feared breakdown did not occur. Fuel supplies continued, refineries operated and the economy avoided a sudden shock. That outcome offers a timely policy lesson for India.
India still needs Strategic Petroleum Reserves. But the next phase of energy security cannot be built by storage alone.
The idea of large emergency stockpiles was shaped by the 1973 oil crisis, when global supply was concentrated in the Middle East and buyers had few alternatives. Today’s oil market is fundamentally different. The United States is a major exporter, Russia has become one of Asia’s largest suppliers, Brazil and Guyana are expanding production, and crude from Africa, Canada and Latin America is traded more widely. Disruptions increasingly redirect cargoes rather than remove every available barrel from the market.
India has already shown how quickly it can adapt. Russian crude had only a marginal place in the country’s import basket before 2022. Within months of the Ukraine conflict, refiners changed procurement patterns and Russia became a leading supplier. The latest Hormuz tensions again demonstrated that sourcing diversity and commercial agility can soften a geopolitical shock.
The real question, therefore, is not simply whether oil exists somewhere in the world. It is whether Indian refineries can efficiently process the oil that becomes available.
Not every barrel is the same. Crudes differ in sulphur content, density, acidity and product yield. A refinery designed around a narrow feedstock range cannot automatically absorb any discounted cargo diverted from another market. Energy security is increasingly being created inside refinery gates, through the ability to switch grades without damaging output, product quality or profitability.
This is where the next large public investment deserves scrutiny. A five-million-tonne underground crude cavern may cost roughly ₹10,000-12,000 crore to construct. Filling it at $60 a barrel could lock up another ₹18,000-19,000 crore. Nearly ₹30,000 crore could therefore be tied up in one facility, besides annual operating expenses. The issue is not whether that reserve has value. It clearly does. The issue is whether every additional rupee should go into another cavern.
Part of the next investment should strengthen refinery flexibility, coastal blending hubs, port infrastructure, shipping arrangements and procurement intelligence. Coastal hubs could scientifically blend crude arriving from different regions into refinery-compatible feedstock. That would allow India to buy opportunistically during disruptions instead of being constrained by what individual plants can process.
The vulnerability around Hormuz is also evolving. The UAE can move crude through the Habshan-Fujairah pipeline to the Gulf of Oman, Saudi Arabia has its East-West pipeline to the Red Sea, and other producers are exploring alternative corridors. Hormuz will remain critical, but over time some supply may gain bypass options. India’s strategy must reflect this changing geography.
For ordinary consumers, this debate is not technical. It determines whether geopolitical turmoil reaches household budgets through higher fuel, transport and cooking costs. Resilience means ensuring that a crisis does not become a queue at a petrol pump or another squeeze on monthly expenses.
India should maintain adequate strategic reserves, but it must stop treating storage as the complete answer. The stronger model is a combination of emergency stocks, diverse suppliers, flexible refineries, blending capacity and agile logistics. The Hormuz lesson is simple: energy security now depends not only on how much oil India can store, but on how quickly it can adapt.
