India barrels its oil problem into advantage
More than an emergency cushion Live Events The geopolitics of hosting crude The Fujairah advantage Gas security A new energy paradigm as a Reliable and
More than an emergency cushion Live Events The geopolitics of hosting crude The Fujairah advantage Gas security A new energy paradigm as a Reliable and Trusted News Source Addas a Reliable and Trusted News Source Add Now! (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel India has a chance to convert its utter dependence on imported oil, a persistent risk, into strategic leverage that can not merely provide it with a large emergency buffer but also prove to be a game-changer in the regional business and geopolitics of oil. India’s partnership with the UAE to develop strategic reserves can rewrite its energy destiny in a world that is becoming increasingly prone to energy disruptions.In an exclusive interview with ET, India’s ambassador to the UAE, Deepak Mittal, outlined plans to expand UAE-linked crude storage in India from 5.8 million barrels to 30 million barrels, alongside the development of a strategic gas reserve framework. This move goes beyond providing India with a mere emergency buffer. It indicates a structural shift in India’s energy diplomacy, positioning the country as a pivotal player in regional oil logistics and trade. By embedding itself deeper into the Gulf’s energy infrastructure, India is crafting a framework that offers both supply security and bargaining power in global oil markets.India’s current Strategic Petroleum Reserve (SPR) capacity is modest, with around 39 million barrels spread across caverns at Visakhapatnam, Mangaluru, and Padur. Under the new India-UAE arrangement, Abu Dhabi Oil Company (ADNOC) will expand its stored crude in India to 30 million barrels, a near fivefold increase.
Mittal emphasised that “strategic reserves can be used in different ways. Some storage can be part of our strategic reserves, and some can also have a commercial dimension.” This dual-use framework allows India to secure energy while providing flexibility for commercial trade, including the sale of crude to third countries.Beyond the immediate function of an emergency cushion, these reserves can confer significant strategic value. By hosting UAE-owned crude, India positions itself as a regional energy hub. The presence of a large, geographically proximate stockpile transforms India’s negotiating stance with other oil exporters. In a global environment marked by supply volatility, transport bottlenecks, and frequent geopolitical disruptions, India can influence both pricing and delivery timelines. Oil-exporting nations, aware that India can access or withhold stored crude quickly, face pressure to offer favourable terms, whether in spot markets, long-term contracts, or supply prioritisation. This is a clear shift from a conventional importer role, in which India reacted to price shocks, to an active player capable of shaping market outcomes.The leverage extends beyond market economics into regional geopolitics. Oil stocks stored in India can serve multiple purposes — a bargaining chip in securing better upstream equity deals, a tool to negotiate payment terms, or a buffer that allows India to avoid knee-jerk dependence on short-term spot purchases. For instance, in times of regional tensions such as attacks on the Strait of Hormuz or drone strikes on Gulf facilities, India can maintain domestic supply without immediate recourse to emergency imports. This autonomy not only shields India from price spikes but also reduces susceptibility to coercive diplomacy, giving India greater flexibility in aligning with international partners.Also, by hosting foreign-owned reserves, India strengthens its regional footprint.
The BriefWire