India’s Refiners May Be Required to Hold Larger Crude Oil Inventories: Insights from China’s Approach
India is considering a significant policy shift to bolster its energy security by requiring domestic oil refiners to increase their crude oil stockpiles. This move is inspired by China’s practices and comes in response to recent supply disruptions linked to the US-Iran conflict. Currently, Indian refiners maintain about 15 days’ worth of crude oil for operational needs, but the proposed policy could mandate them to hold reserves sufficient for 30 days of national consumption.
Current Inventory Levels and Proposed Changes
As of the end of 2025, India held approximately 21 million barrels of strategic crude reserves, a stark contrast to China’s 1,397 million barrels and the US’s 413 million barrels. The proposed policy would require Indian refiners to collectively maintain around 150 million barrels of crude oil, based on the country’s daily demand of about 5 million barrels. This increase would necessitate significant investment, with estimates suggesting that refiners could face costs nearing Rs 60,000 crore for additional crude purchases alone.
Industry stakeholders are likely to resist the proposal due to the substantial financial burden of expanding storage capacity and procuring the extra crude oil. Building new storage facilities is capital-intensive and could take several years to complete. Policymakers are urged to provide flexibility regarding the location of storage and the commercial use of the crude held in these facilities.
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