Can India Build an Oil Buffer Big Enough to Survive the Next Supply Shock?

India is seriously weighing a China-style policy that would require domestic refiners to hold far larger crude inventories, well beyond the current 15 days they maintain for operations. The idea, triggered by the near-closure of the Strait of Hormuz during the Iran war, would push mandatory stockholding to around 30 days of national demand, meaning refiners would together need to hold some 150 million barrels.

The cost is eye-watering. Refiners may need to spend roughly Rs 60,000 crore just on crude purchases to double their inventories, and additional thousands of crore more to build new storage tanks, a process that could take years to execute . By contrast, at the end of 2025, India held just 21 million barrels in its government strategic reserves against China’s massive 1,397 million barrels, America’s 413 million barrels, and Japan’s 263 million barrels.

China built its buffer by stocking up quietly and consistently, adding 1.1 million barrels per day through all of 2025, and accelerating even further before the West Asia conflict erupted . India’s government reserve today covers barely 9.5 days of supply, while total stocks including refinery and port inventory add up to about 74 days . So the message from the Iran crisis is clear: proximity to the Gulf is no substitute for a real oil cushion, and India must now build one before the next shock arrives.