The ongoing US-Iran war and the indefinite closure of the Strait of Hormuz have led to a significant decline in India's crude oil inventories, dropping by approximately 15% since late February. According to estimates from commodities analytics firm Kpler, refiners have maintained steady processing levels despite lower import volumes, drawing down existing stockpiles.
Impact on Global Oil Inventories
The International Energy Agency (IEA) reported that global oil inventories decreased by 129 million barrels in March and another 117 million barrels in April. The agency warned on Wednesday that with inventories shrinking at a record pace, oil markets could face further price volatility ahead of the peak summer demand season.
India's Crude Oil Stockpile Details
Kpler's data, quoted in an ET report, shows India's crude oil stockpile has dropped to 91 million barrels from 107 million barrels at the end of February. This includes strategic petroleum reserves (SPR), refinery inventories, and commercial storage, but excludes pipeline stocks. With daily oil consumption at roughly 5 million barrels, current inventories are sufficient for nearly 18 days of demand based on Kpler's calculations.
However, the government stated on Monday that existing crude reserves are adequate for up to 60 days of national consumption, though detailed calculations were not provided. Sujata Sharma clarified on Thursday that the government's estimate includes crude cargoes currently en route to India and pipeline inventories.
Refinery Operations and Import Trends
India's crude oil imports have averaged around 4.5 million barrels per day (mbd) over the last two-and-a-half months, down from nearly 5 mbd before the war. Nikhil Dubey, lead analyst at Kpler, noted that refinery operating rates have not fallen proportionally to the import decline, indicating that refiners are bridging the shortfall by drawing down inventories, primarily from refinery storage. He described the reduction as moderate.
An industry executive pointed out that the inventory depletion would likely have been steeper if Nayara Energy had not conducted maintenance work at its 400,000 barrels-per-day refinery in Gujarat during April.
Future Outlook and Fuel Conservation Call
Dubey warned that with the Strait of Hormuz reopening uncertain, India cannot rely on inventory drawdowns indefinitely. Refiners may eventually be forced to lower processing rates, which could explain Prime Minister Narendra Modi's recent appeal for fuel conservation.
The near shutdown of the Strait of Hormuz has reduced Gulf oil production by 14.4 mbd compared to pre-war levels. Global oil supply fell by an additional 1.8 mbd in April to 95.1 mbd, cumulatively losing 12.8 mbd since February. While Saudi Arabia and the UAE managed exports via alternative routes, Iraq and Kuwait, heavily dependent on the Strait, could not ship any oil volumes.
