India Should Build Larger Strategic Oil Reserves to Reduce Supply Risks: EY Report

Rising dependence triggers alarms on energy security

EY’s big new analysis says India urgently and undeniably needs to build up its emergency oil stockpiles dramatically to protect its economy from sudden global supply disruptions. In the last few decades, the country’s dependence on imported crude oil has quietly skyrocketed, rising from around 55% in 1999 to just over 90% in 2026. The steep and consistent rise in petroleum prices, owing to a falling domestic oil production and a huge surge in national energy demand, has turned petroleum into one of the single largest external threats to India’s economic stability, making it absolutely imperative for the country to rethink and strengthen its core energy security framework.

Building a Better Shield Against Geopolitical Shocks

To address these growing risks, experts are calling on the government to establish far larger strategic petroleum reserves. Big, available stockpiles serve as an important economic cushion when conflicts, tensions in the Middle East or sudden price spikes upset the global market. “Geopolitical crises have shown time and again that countries with larger emergency reserves are far better placed to withstand unexpected supply shocks and stabilise their domestic markets. The report thus stresses the need for India to have a very well-coordinated, all-encompassing approach that takes into account not only the volume of oil held but also the need to improve smart procurement plans and rapid release mechanisms in times of crisis.

Breaking the Long-Term Import Dependence Cycle

The immediate safety net is to build up bigger physical reserves. The ultimate long-term fix is to attack this heavy dependency at its root. Analysts emphasise the need for India to aggressively ramp up domestic oil production, significantly improve energy efficiency in key industries and greatly accelerate the transition to cleaner, alternative energy to cut long-term import dependence. The perfect balance between short-term emergency storage and a faster green energy transition will be absolutely critical in protecting everyday consumers and local businesses from the unpredictable, volatile waves of the global energy market.