Soaring Imports Push India's Crude Stocks To Near 1-Year High

India’s strategic and commercial crude oil inventories have jumped to a nearly one-year high as the world’s third-largest crude oil buyer boosted its imports to a record high in June, OilPrice reported.

As at the end of June, India’s crude oil stocks held in strategic, commercial, and refinery storage had increased to 104 million barrels, up from 90.5 million barrels at the end of April, according to data from commodity intelligence provider Kpler cited by Indian outlet Economic Times. Before the Iran war began, India held 107 million in crude oil inventories as of the end of February—the highest end-month level for the previous 12 months.

The war depleted inventories in March and April, before Indian refiners started raising imports from Russia and turn to Venezuela—both sources of supply that doesn’t need to transit the Strait of Hormuz.

By June, stocks were recovering and nearing the level from before the Iran war.

India imported a record high level of 5 million barrels per day (bpd) of crude oil in June, more than half of which - 2.6 million bpd - from Russia, thanks to the U.S. waiver (now expired) on sales of Russian oil already loaded on tankers.

Yet, India wants to lower its crude import bill, protect public finances, and become more resilient to supply shocks such as the Middle East conflict that crippled supply from the Strait of Hormuz. That’s why it is looking to boost energy security by diversifying import sources and expanding its strategic storage.

Currently, India’s underground Strategic Petroleum Reserve storage has a total capacity of 5.33 million metric tons of crude oil, equal to only 39 million barrels of crude oil, or eight days’ worth of India’s oil consumption.

India’s storage of just about a week of its roughly 5 million bpd of consumption, is well below the SPRs of many other large oil consumers, which exposes New Delhi’s vulnerability to sudden supply shocks.

Separately, in response to media reports that India is flipping Russian oil imports by exporting its products back to Russia, India’s Oil Minister, Hardeep Singh Puri, said that the country's refiners are not directly exporting any refined petroleum products to fuel-starved Russia, although some supplies from traders are likely reaching Russia.

Reports emerged earlier this week that Russia had started importing fuel from India by sea in a bid to ease the fuel shortages triggered by Ukrainian drone attacks on Russian refineries. In an exclusive Reuters report, industry sources revealed that an initial shipment of at least 60,000 metric tons (510,000 barrels) of gasoline has been dispatched from India via two tankers destined for Russian ports.

Hours after the report surfaced, India’s oil minister insisted that Indian refiners aren’t directly selling fuel to Russia.

“Indian companies are not selling fuels to Russia,” Puri said at a media briefing, but acknowledged that it is “possible that Indian-origin refined fuel is sold to Russia via traders.”

Gasoline from Indian refiner Nayara Energy, in which Russia’s top oil firm Rosneft holds a 49% stake, has been sold to Russia via traders, sources with direct knowledge of the deals told Reuters on Thursday. So it is likely that India-produced fuels are now reaching Russia via traders, as Moscow scrambles to alleviate a major fuel supply crisis.

Ukraine’s intensified drone strikes in recent months have now knocked offline an estimated 30% of Russia’s oil refining capacity. During peak summer demand, Russian refining throughput has sunk to a two-decade low.

In a rare public admission at the end of June, Russian President Vladimir Putin acknowledged that Russia faces fuel shortages and a fuel crisis that needs further government intervention to solve.

The fuel shortages that emerged in some regions in May have now reached the capital city Moscow, too, after Ukrainian strikes last month hit and sent Moscow’s Kapotnya refinery offline. The refinery is unlikely to resume fuel production before 2027 after suffering extensive structural damage from multiple strikes by Ukraine’s long-range drones, industry sources told Reuters last month.