NEW DELHI: The last time crude oil prices rose as sharply in a single day as they did on Monday (September 16) was during the 1990-91 Gulf crisis. Apart from triggering a balance of payments crisis that led to the reforms of 1991, the crisis also left India with oil reserves for just three days at one point. Today, India can survive for more than two months without importing oil. That’s a big cushion.
What changed? While India’s financial situation (with forex reserves of $430 billion) puts it in a much better position to deal with price spikes, it is the improved oil storage infrastructure that’s behind the limited insurance we have in case of a supply crunch. India imports over 80% of its oil requirement.
How many days? India’s refineries usually keep a stock to last for around 60 days. To keep the flow of crude to refineries going in case of a supply disruption, India also has massive underground storage capacity for oil. They are called strategic petroleum reserves (SPRs).
