- Indian OMCs use commercial crude storage to offset supply shortages from Strait of Hormuz closure
- US-Israel-Iran conflict disrupted West Asian oil, increasing freight and insurance costs globally
- India's crude imports fell to 2.7-3 mbpd in March, down from 6.38 mbpd a year earlier
Indian oil marketing companies are drawing on commercial crude storage to offset supply shortages triggered by the closure of the Strait of Hormuz and surging oil prices. The US-Israel war with Iran has disrupted West Asian supplies, driving up freight, insurance costs, and voyage times, while tightening the global oil market.
Domestic demand has remained resilient, limiting OMCs' ability to pass higher costs to consumers. Alternative supplies sourced outside the Gulf came at significant premiums, reflecting heightened competition among importing nations.
The crude and petroleum product import bill fell 36% YoY in March to $12.18 billion, down from $19 billion a year earlier. However, this decline reflects reduced volumes rather than lower prices. Crude oil imports are estimated to have collapsed to 2.7-3 million barrels per day (mbpd) last month, compared with 6.38 mbpd a year earlier. Typically, imports rise between March and July to meet summer demand and kharif sowing requirements, but this year's disruption has reversed that trend.
Source: Commerce Ministry
India's petrol consumption climbed to a 10‑month high of 1.08 mbpd in March, while diesel demand hit record 2.14 mbpd, driven by stronger transportation needs across both passenger and commercial sectors, according to the Petroleum Planning and Analysis Cell.
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India's crude basket averaged $113.49 per barrel in March, up from $69.01 in February and $72.47 a year earlier, the PPAC data showed. Brent crude averaged $103.89/bbl in March, compared with $71.15 in February and $76.2 last year.
Source: PPAC, Commerce Ministry
The Petroleum Ministry reported in December 2025 that India's total storage capacity covers 74 days of crude and petroleum products, including nine days in strategic reserves managed by the Indian Strategic Petroleum Reserves Limited and 65 days with OMCs. As of March 26, the country held stocks equivalent to 60 days of supply. Refineries are operating near full capacity, but the government has refrained from releasing strategic reserves, leaving OMCs to rely on commercial stocks. It is expected that replenishing inventories will be costlier, with prices remaining elevated for a longer period.
The Strait of Hormuz, through which one-fifth of the world's oil supply passes, has remained shut despite the US and Iran agreeing on a two-week ceasefire on April 8 and US President Donald Trump further extending the ceasefire on April 22. Iran's Islamic Revolutionary Guard Corps closed the ship movement from the strait in retaliation for the blockade of Iranian ports by the US Navy. This has disrupted over 600 million barrels of oil to the global markets, as per industry estimates.
The share of the value of petroleum crude and petroleum products imported in the calendar year 2025 was 77% and 23%, respectively.
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