India's Oil Import Dependence Crosses 90%, EY Calls for Boosting Strategic Reserves
India's dependence on imported crude oil has crossed 90 per cent in the financial year 2025-26, according to a report by Ernst & Young (EY). The consultancy has warned that the country must expand its strategic crude oil reserves to mitigate risks from global supply disruptions.
The report, titled 'India's Petroleum Economy: Coping with Vulnerabilities', highlights that crude import dependence has risen steadily from 55 per cent in FY1999 to over 90 per cent in FY2026. This leaves the Indian economy increasingly exposed to geopolitical tensions and price volatility in international markets.
Domestic crude production has declined despite rising energy demand. India's crude oil output peaked at 35.9 million metric tonnes (MMT) in FY2012 but fell to 26 MMT in FY2026. Meanwhile, petroleum product consumption nearly tripled during the same period, from 90.6 MMT in FY1999 to 243.2 MMT in FY2026, further widening the gap between domestic supply and demand.
On the positive side, refining efficiency improved by around 33 per cent between FY1998 and FY2026, enabling India to strengthen exports of petroleum products. However, the report flags the country's limited emergency crude reserves as a major concern.
According to EY, citing data from the US Energy Information Administration (EIA), India currently holds about 21 million barrels in strategic crude reserves—enough for only around five days of consumption. In comparison, China maintains strategic reserves of nearly 1,397 million barrels.
The report recommends that India begin expanding its strategic reserves once global crude markets stabilise. It also suggests developing a detailed strategy for managing reserves, including volumes, purchase timelines, and release mechanisms, while accounting for carrying costs.
EY describes India's petroleum sector as having two contrasting characteristics: high dependence on imported crude, which remains a structural vulnerability, and a strong refining industry capable of exporting refined products.
