EY warns as import dependence crosses 90% in FY26 (File photo)

EY (Ernst & Young LLP)), in its recent report, has warned India to significantly expand its strategic crude oil reserves as the country’s dependence on imported crude has crossed 90 per cent, leaving the economy increasingly vulnerable to global supply disruptions.Titled India’s Petroleum Economy: Coping with Vulnerabilities, the report said petroleum remains one of the country’s biggest external risks, with crude import dependence rising steadily from 55 per cent in FY1999 to more than 90 per cent in FY2026.“Going forward, India may need to augment its strategic crude oil reserves… Further, India may develop a detailed strategy for maintaining crude oil reserves which spells out the volume of reserves, strategy of purchases and releases from such reserves taking into account the relevant carrying costs,” the report stated.

Domestic production declines as fuel demand rises

The report also highlighted that domestic crude production has continued to decline 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.It also mentioned that petroleum product consumption nearly tripled during the same period, increasing from 90.6 MMT in FY1999 to 243.2 MMT in FY2026, further widening the country’s dependence on imported crude.However, Refining efficiency improved by around 33 per cent between FY1998 and FY2026, enabling the country to strengthen exports of petroleum products.

India’s strategic oil stocks remain limited

The report also flagged India’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 consultancy advised India to begin expanding its strategic reserves once global crude markets stabilise, helping reduce the country’s exposure to geopolitical tensions and supply shocks.EY described 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 petroleum products.