UPSC Darpan

International RelationsGS23 October 2026

Iraq Returns as India’s No. 2 Crude Supplier; G7 Releases 100 Million Barrels

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The news

New Delhi and Brussels, October 2. India’s crude imports hit a year-high of 5.26 million barrels a day (mbd) in September, and Iraq became the second-largest supplier behind Russia for the first time since the US–Iran war began on February 28, The Economic Times reports from Kpler data. Tankers cross the Strait of Hormuz with AIS transponders, the ship-location beacons, switched off, and pass cargo ship-to-ship (STS) in UAE and Omani waters, so the supplier carries the strait’s risk. Russian imports fell almost 9% to 1.9 mbd, still over 35% of the total (The Indian Express). Provisional figures differ: Iraq at 525,000 barrels a day (ET) or over 551,000 (IE). On Friday the G7, chaired by France, agreed to release 100 million barrels of oil and diesel through the International Energy Agency (IEA) over four months, front-loading diesel within 20 days. Brent fell $1.80 to $100.50.

The chain in one line: US–Iran war chokes Hormuz → Gulf supply to India nearly vanishes → Graham Act threatens tariffs on Russian-oil buyers → STS workaround brings Iraq back → G7 adds an IEA release before US midterms

Static syllabus linkage

  1. The IEA is the importers’ insurance pool, and India is only an associate. The International Energy Agency was created in 1974 within the OECD framework after the 1973–74 oil embargo. Members must hold emergency stocks of at least 90 days of the previous year’s net imports and join coordinated releases. India became an Association country in March 2017, so it is not bound by the members’ 90-day stockholding rule.
  2. India’s strategic petroleum reserve is measured in days. Indian Strategic Petroleum Reserves Limited (ISPRL), under the Oil Industry Development Board of the Petroleum Ministry, stores crude in underground rock caverns at Visakhapatnam (1.33 million tonnes), Mangaluru (1.5 MT) and Padur (2.5 MT), totalling 5.33 MT, roughly nine to ten days of national consumption.

Why UPSC loves this

  1. GS3 makes energy security a standing question. The syllabus line is “Infrastructure: Energy, Ports, Roads, Airports, Railways etc.” Import dependence, chokepoints and strategic reserves recur, and this story joins all three to a live institution, the IEA.

Prelims nuggets

  • The Strait of Hormuz lies between Iran and Oman’s Musandam peninsula, linking the Persian Gulf with the Gulf of Oman.
  • The International Energy Agency, founded in 1974, requires members to hold oil stocks of at least 90 days of the previous year’s net imports.
  • ISPRL’s strategic crude reserves are at Visakhapatnam (Andhra Pradesh), Mangaluru and Padur (both Karnataka), with a combined capacity of 5.33 million tonnes.
  • The G7 comprises the US, the UK, France, Germany, Italy, Japan and Canada, with the European Union also taking part.

Analysis

  1. Lens — National interest and global commons: the G7 release helps India, but India cannot count on it. A coordinated release lowers the world price for every importer, so India gains without contributing. But it follows members’ politics: diesel-heavy for Europe, timed to the US midterms on November 3, and called “a political statement rather than a specific and binding commitment” by Energy Aspects. India should treat such releases as a bonus and build its own buffer, since others set the commons’ priorities.
  2. The STS workaround shifts risk to suppliers but leaves India exposed. Refiners now take oil outside the strait, so freight and insurance risk falls on Gulf producers. But one major strike could halt the flow. The West Asian share was 36.7% in September against 56.3% before the war (The Indian Express), so the route has only partly reopened.
  3. Gulf barrels are India’s hedge against the Graham Act. With Russia over a third of imports and the US law allowing tariffs of up to 100% on its biggest buyers, Gulf crude gives refiners “optionality” to cut Russian barrels, as Kpler put it, and its grades yield more diesel. Autonomy here means having choices; note that September’s Russian fall came from Chinese competition and Ukrainian strikes, not Indian policy.

Possible Mains question

To what extent can diversification of crude suppliers, rather than strategic reserves, secure India’s energy needs during a prolonged disruption in the Strait of Hormuz? (15 marks, 250 words)

Model approach

  1. Directive — To what extent. Weigh how far diversification works and where reserves still matter.
  2. Introduction — September shows promise and limits. Year-high imports, yet Gulf share below pre-war.
  3. Diversification has done the heavy lifting. Russian, then STS Gulf supply; Kpler data as value addition.
  4. Every source carries its own risk. Graham Act, attacks; map: Gulf terminal → STS off UAE/Oman → India.
  5. Reserves buy time, not supply. ISPRL covers days; IEA association gives price relief, not stock rights.
  6. Conclusion — Diversify first, deepen reserves second. Combine sourcing, larger reserves and fuller IEA engagement.

Administrator's brainstorm

As Secretary, Petroleum, would you release crude from the strategic reserve now that the G7 is releasing stocks?

Not yet. The G7 release is easing prices and Gulf supply has partly returned, so drawing down a reserve of only days would waste the last buffer. I would hold it for a physical shortfall, such as a halt to the STS route, announce the trigger for its use, and push refiners to lock in Gulf cargoes.