India’s Crude Oil Stocks Rebound to Near 1-Year High Amid Global Volatility

India has successfully replenished its strategic and commercial crude oil reserves, bringing inventory levels close to a one-year high. This recovery follows a period of significant depletion caused by supply disruptions during the US-Iran conflict, which had previously threatened the nation's energy security.

Rapid Recovery of Crude Inventories

Following a sharp decline in the second quarter, India's crude oil inventories have staged a robust comeback. Data from global analytics provider Kpler indicates that India's crude oil inventory stood at approximately 104 million barrels at the end of June. This represents a significant increase from the 90.5 million barrels recorded at the close of April.

The depletion was notably visible between February and April. Before the US-Iran conflict disrupted import flows, stockpiles were at 107 million barrels in late February. However, as refiners relied on existing stocks to maintain operations, levels dropped to 95.5 million barrels in March and hit a low of 90.5 million barrels in April. With India consuming roughly 5 million barrels of crude daily, the current 104-million-barrel stockpile provides a safety cushion of approximately 21 days of demand.

Russia Emerges as India's Dominant Energy Partner

The geopolitical shifts caused by the US-Iran conflict have fundamentally altered India's import basket, cementing Russia's position as the country's primary energy provider. As refiners sought to mitigate risks associated with the Strait of Hormuz, they pivoted heavily toward Russian supplies.

In June, imports from Russia crossed a historic milestone of 2.5 million barrels per day (mbd), accounting for more than half of India’s total crude purchases. Over the four-month conflict period, India imported more than 240 million barrels from Russia. To put this dominance in perspective, Russian shipments were more than four times the volume imported from the UAE, which supplied just over 58 million barrels during the same period.

The closure of the Strait of Hormuz posed a severe threat, as the waterway handles nearly 40% of India's crude oil imports. To prevent fuel shortages and potential political repercussions, Indian refiners maintained high operating rates and were willing to pay premiums to secure alternative cargoes.

While the government noted that widespread shortages were avoided, some isolated instances of rationing occurred due to panic buying and shifts in consumer behavior toward state-owned outlets. However, with an interim agreement reached between the US and Iran and the partial resumption of shipping through the Strait of Hormuz, energy security concerns have eased. Oil Minister Hardeep Singh Puri confirmed that shipping delays in the Persian Gulf have largely subsided, stating that the current situation is no longer problematic.

Key Takeaways

  • Inventory Stability: India’s crude stocks have rebounded to 104 million barrels, providing enough supply to meet approximately 21 days of national demand.
  • Russian Dominance: Russia has become India's largest supplier, with June imports exceeding 2.5 mbd and accounting for over 50% of total crude purchases.
  • Supply Chain Resilience: Despite disruptions in the Strait of Hormuz, aggressive sourcing and the use of alternative routes have stabilized the domestic fuel market.