India approves 1.75 MMT strategic oil reserve

India is expanding its strategic oil reserve after recent disruptions to global energy supplies exposed vulnerabilities in its fuel import network. State-run Oil and Natural Gas Corporation (ONGC) has approved plans to develop a 1.75 million metric tonne (MMT) strategic petroleum reserve in Mangalore, reinforcing the country's long-term energy security amid growing geopolitical risks.

The decision comes after restrictions on the Strait of Hormuz during the recent conflict involving the United States and Iran disrupted energy trade through one of the world's most important oil shipping routes. India, the world's third-largest crude oil importer and second-largest importer of liquefied petroleum gas (LPG), remains heavily dependent on overseas fuel supplies, making uninterrupted access to global oil markets a strategic priority.

In a stock exchange filing on Thursday, ONGC said its board had "accorded an in-principle approval for the development of 1.75 MMT capacity strategic petroleum reserves as a project of national importance" in the southern city of Mangaluru.

The project forms part of New Delhi's broader strategy to strengthen fuel security while expanding domestic oil and gas production.

Last week, Petroleum and Natural Gas Minister Hardeep Singh Puri said the government was significantly increasing investment in upstream exploration.

"We are putting fiscal resources into oil and gas exploration in a very big way—with a $10 billion programme," he told AFP.

Despite those efforts, India remains a relatively small crude producer. According to the Ministry of Petroleum and Natural Gas, domestic crude production reached 25.98 million metric tonnes in the 2025–26 financial year.

That output meets only about 10 per cent of the country's crude oil demand, equivalent to around 522,000 barrels per day. Production remains well below its peak of just over 900,000 barrels per day recorded in 2011.

To reduce supply risks, India has broadened its crude procurement strategy. The country has expanded its list of oil suppliers from 27 to 41 nations, increasing purchases from Russia and sourcing additional crude from Iran, Venezuela and several African producers.

New Delhi's growing imports of discounted Russian oil have previously drawn criticism from the United States and European countries, which argued that the purchases helped finance Moscow's war in Ukraine.

The expansion of India's strategic petroleum reserve is expected to provide a stronger buffer against future supply disruptions, reduce exposure to geopolitical shocks affecting key maritime trade routes such as the Strait of Hormuz, and improve the resilience of the country's energy system during periods of market volatility.