India has significantly increased Russian crude oil imports to a record 2.66 million barrels per day in June, aiming to secure energy supplies amid Strait of Hormuz disruptions. Additionally, the government has tasked ONGC to develop a new ₹15,000 crore strategic petroleum reserve in Mangaluru to bolster long-term energy security.
What Happened
India has aggressively diversified its crude oil procurement, with imports from Russia surging to an average of 2.66 million barrels per day (bpd) between June 1 and June 19, according to commodity intelligence data. This marks a substantial increase from 1.91 million bpd in May, solidifying Russia's position as India's largest crude supplier. The shift comes as Indian refiners navigate supply chain uncertainties caused by geopolitical tensions in the Strait of Hormuz, a critical energy corridor for the Middle East. Meanwhile, imports from the United States have declined, while supply from Venezuela and the UAE remains part of the diversified import basket.
Strategic Reserve Expansion
In a significant move to strengthen national energy security, the government has directed the state-owned Oil and Natural Gas Corporation (ONGC) to develop a new strategic petroleum reserve (SPR) in Mangaluru, Karnataka. This project, estimated to cost approximately ₹15,000 crore (around $1.6 billion), involves creating an underground crude storage cavern with a capacity of 1.75 million metric tonnes (MMT).
Unlike previous SPR projects, which were funded by the government and managed by a special-purpose entity, this facility will be financed and constructed using ONGC's own balance sheet. Once operational, the facility is expected to increase India's existing emergency crude storage capacity of 5.33 MMT by nearly one-third.
Pressure on Oil Marketing Companies
While the crude supply remains stable due to diversified sourcing, domestic fuel retailers—specifically Oil Marketing Companies (OMCs) like Indian Oil Corporation (IOC), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL)—continue to face financial pressure. Petroleum Minister Hardeep Singh Puri has acknowledged that these companies have been incurring significant daily losses due to high global crude prices and the decision to keep retail fuel prices largely unchanged to insulate consumers. While the Minister noted that fuel prices could soften as cheaper crude stocks reach refiners, the margin pressure remains a key factor for the profitability of these state-run retailers.
What Investors Should Track Next
Investors tracking the energy sector should monitor several moving parts. For ONGC, the primary focus will be the execution timeline and the long-term impact of this capital-intensive project on its balance sheet, as the revenue-generation model for this strategic asset remains to be clarified. For OMCs, market participants will watch the trend in global crude prices and any potential adjustments in retail fuel pricing or government intervention to support margins. Additionally, the continued reliance on Russian crude, given its current price discounts, will remain a critical monitorable for the profit margins of Indian refiners.