India has 50 days of crude stock; there are options beyond Strait of Hormuz: Govt sources amid Iran war

The government is also expecting the oil price to go up to $82 per bbl if the war between Iran and US-Israel does not stop in the next 10-15 days

• India has 50 days of oil stock amid Gulf tensions
• India seeks alternative oil, LPG sources due to conflict
• LPG and LNG supplies monitored; no need for panic buying

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India is constantly monitoring the evolving situation in West Asia with the ministry of petroleum and natural gas concluding multiple meetings with Indian companies in the last 48 hours to take stock of the situation and charting contingency plans, including alternative regions for supply of crude oil, government sources aware of the development said.

India is comfortably positioned with 50 days of crude oil and products stock amid the escalating conflict in the Gulf and is constantly monitoring the unfolding situation, sources said, dismissing concerns over shortage of energy requirements.

The rising tensions in West Asia has put India’s oil supplies at risk with around 40 percent of the country’s total monthly oil imports passing through the Strait of Hormuz, a key passage between the Persian gulf and the Gulf of Oman.

Government sources said that India continues to be cautiously optimistic that it can take domestic steps and diversify (sourcing) as the need arises. They noted that not all supplies of oil come via the Strait of Hormuz.

“Other options besides the strait of Hormuz are there, including cape of good hope which will increase insurance and freight costs,” sources said, adding that the country is looking at alternate supplies for oil and gas amid the heightened tensions.

The country continues to purchase Russian oil with imports touching 1.04 million barrels per day in February. Analysts have said that Indian refiners are expected to turn back to Russian oil supplies if access to the West Asian grades tighten.

Oil price outlook

Brent crude oil prices touched $82 per barrel on March 3, up from $72 per barrel on February 27 owing to rising conflict in the Gulf. The government and analysts expect crude oil prices to further increase if the conflict is prolonged. “If the war doesn’t stop in 10-15 days and is extended, oil price could go up to $82/bbl,” the sources said.

The government is monitoring the situation in the West Asia non-stop and is looking at alternate options for its energy supplies. “There is a military conflict in full swing. Affordability, availability and sustainability are the three pillars of India’s energy strategy,” one of the sources said.

LPG flows

The escalating tensions in West Asia have not only put India’s crude oil supplies at risk but have also pressured the country’s LPG flows, with 80–85 percetn of its LPG needs, with the majority sourced from Gulf suppliers, almost entirely transiting via the Strait of Hormuz.

Government sources said that India has increased its LPG sourcing from the UAE, Norway, the USA and Saudi Arabia and has the option to increase the domestic output in case the flows get restricted.

“The Indian government has started scouting for alternative options before the military conflict. India has 25-30 days of LPG stock and there is no need for panic buying,” sources said adding that there are no discussions of diversion of oil from industrial use.

On the supplies of LNG getting restricted owing to the shutdown of the Qatar LNG export facility, sources said that if the Qatar facility doesn’t open then the government will address the issue.

Qatar is India’s largest supplier of LNG accounting for over 40 percent of total imports. The country stopped LNG production at the world's largest export facility after the facility was targeted in an Iranian drone attack.

'24x7 tracking of petroleum stocks'

Meanwhile, an official statement from the oil ministry said that Indian energy companies now have access to energy supplies that are not routed through the Strait of Hormuz. “Such cargoes will remain available and help mitigate supplies that may be temporarily affected enroute through the Strait of Hormuz,” the ministry said.

The ministry also said the country is well stocked with crude oil and inventories of key petroleum products including petrol, diesel and ATF to deal with short-term disruptions arising from the Middle East.

The oil ministry has established a 24×7 Control Room to continuously monitor the supply and stock position of petroleum products across the country.

“At present, the government is reasonably comfortable in terms of stocks. Safeguarding the interests of Indian consumers remains the highest priority. Based on continuous monitoring, the government is cautiously optimistic that phased measures can be taken, if required, to further mitigate the situation,” the ministry said.

India is the third largest importer, fourth largest refiner, and fifth largest exporter of petroleum products globally.