The proposed stockpile would be in addition to the roughly 15 days of crude that refiners hold at their facilities for operational needs. The proposal is at a preliminary stage and key details have yet to be finalised, the people said, adding that no final decision has been taken on its implementation.
Refiners are likely to push back against the plan, citing the substantial cost of building new storage facilities and filling them with crude oil, said one of the persons, who did not wish to be identified. If refiners are required to double their inventory levels to cover about 30 days of national demand, they would need to hold a combined 150 million barrels of crude, based on India’s consumption of 5 million barrels per day.
Additional investments required
At current oil prices and exchange rates, refiners may collectively have to spend about Rs 60,000 crore on crude purchases alone to double their inventories.
Additional investments running into several thousand crore rupees would be needed to build new storage tanks, a process that could take years.
If implemented, the policy should give refiners flexibility over where they build storage and how they trade the crude oil held in those tanks, said a person familiar with the refiners’ thinking.
The government should encourage refiners to build storage near ports, allowing inventories to be readily traded in international markets, he said, pointing to Singapore’s vast tankage network, which has helped make it Asia’s leading oil trading hub.
The near-closure of the Strait of Hormuz has upended a long-held assumption among Indian policymakers that proximity to the oil-rich Persian Gulf almost obviates the need for large strategic petroleum reserves. At the end of 2025, India held just 21 million barrels of strategic crude stocks, compared with 1,397 million barrels in China, 413 million barrels in the US and 263 million barrels in Japan, according to the US Energy Information Administration.