There's a specific type of policy decision that happens once the bill makes it to the policy level. India's new decision to uphaul its strategic petroleum reserves was a decision of that kind and this time, the bill came due in four turbulent months when the Strait of Hormuz temporarily ceased functioning like a pipeline, and began functioning like a chokepoint that may choke.

The statistics speak for themselves. At the time of the Iran war in late February, which lasted into the spring, India held only 39 million barrels of strategic crude oil in three underground caverns located at Visakhapatnam, Mangaluru and Padur. That's about eight to nine and a half days of coverage for a nation that consumes some five million barrels of oil daily. But that's not the case when you compare it to China, which was in the crisis with about 1.4 billion barrels of strategic and commercial stocks, and the difference ceases to be a fact and becomes a liability with a cost. However, unlike Beijing, which was able to rely on its own stocks and actually reduced its crude imports by nearly a third in May despite the rise in prices, Indian refiners didn't have that option. Since they were not able to have access to the reserves in the tank, they were forced to purchase on the spot market at crisis prices.

Now that imbalance is fueling one of the more significant infrastructure decisions made in the petroleum ministry over the last several years. Officials close to the development told ET that the government has left behind the one Mangaluru project that made headlines a fortnight ago and is working on five different strategic storage locations: a new underground cavern at Mangaluru, which will be constructed and funded by ONGC; an expansion at the current Padur facility, which is under a public-private partnership (P3) already awarded to Megha Engineering and Infrastructures; and two greenfield sites being scouted at Bina, MP and Bikaner, Rajasthan. Extensive feasibility studies at Bina and Bikaner should kick off once the requisite clearances are received, and the Chandikhol construction contract is set to be targeted for closure before the end of this financial year.

The goal is ambitious. If all the legs of this expansion materialize, India's strategic storage cover could rise to nearly forty days of consumption from the current nine and a half days, depending on the demand conditions at the time of filling of caverns. It would still fall short of the ninety days that the International Energy Agency recommends member countries maintain, but it would be nearly a fourfold increase in resilience and it would be the first time a state-owned producer, not a dedicated reserve company, is given the responsibility for building one of these facilities.

The Mangaluru project is just one example of the investment that is being put in place. At a location it already owns, ONGC has been requested to drill and fill a 1.75 million tonne underground rock cavern, at an estimated cost of fifteen thousand crore rupees, or about one point six billion dollars. About one third of this money is used for excavation and engineering; the other two thirds is just the price of crude to fill the cavern. That's a very important arithmetic fact that makes timing a significant factor in this story. Brent has been all over the map this year with a peak during the mid-nineties in early June and a retreat back toward the low seventies as ceasefire talks between Washington and Tehran took hold. As negotiations resume this week in Doha, New Delhi has a smaller but viable window to replenish new stocks on a lower cost than a month back with prices relaxing towards seventy-three to seventy-five dollars per barrel.

When you trace out the line of reasoning, the economic rationale behind all this urgency is quite simple. India's crude imports range from between 85% and 87% of its consumption; and each ten dollars increase in the price of Brent crude that is maintained over a year is projected to increase the annual import bill by an estimated eighty-five to ninety thousand crore rupees. That will increase the current account deficit, exert downward pressure on the rupee, which in turn makes each barrel of crude more expensive as the dollar price of crude is paid for in rupees, so it is a vicious circle which the Reserve Bank of India monitors as closely as any one external risk factor on its list. This was no theoretical loop in the worst weeks of the Iran conflict. Petrol stations in Mumbai and Gujarat's ceramics belt were really disrupted, and excise duty on petrol and diesel was slashed by ten rupees a litre, in particular, in late March to prevent retail prices from spiraling out of control, while in the wider region, coal-fired power generation was under pressure as gas supplies were squeezed India's coal investment pipeline is reportedly rising to an estimated one hundred and eighty billion dollars, which is the highest level since 2012.

It would be a mistake to read this purely as a story about tanks and caverns. What is being argued more deeply inside the ministry of petroleum, and what energy economists following the file have said, is that reserve capacity is as solid as a fiscal buffer or foreign exchange war chest, a macro-economic insurance mechanism. Nearly seventy percent of India's crude imports now comes from outside the Strait of Hormuz with imports from Russia's Urals having been ramped up over several years, soaring to a premium of ten to twenty dollars a barrel over Brent crude, and briefly making Russia India's biggest crude supplier over Saudi Arabia and Iraq. Diversification of source is not insulation from shock. Even if the crude doesn't pass through Hormuz physically, its price is based on a global benchmark that most certainly has a reaction when the tankers begin getting damaged off Oman or when insurers begin to factor in war risk for shipments in the Gulf.

There is also a more muted international aspect to this build-out which has not received sufficient attention. In May, India's Strategic Petroleum Reserves company inked a framework agreement with Abu Dhabi National Oil Company that included talks on building capacity in India to store ADNOC-linked crude to up to thirty million barrels, including at Mangaluru and Visakhapatnam and the proposed Chandikhol site, as well as a potential storage link to ADNOC terminal Fujairah and collaboration on LNG/LPG. Such deals allow a foreign crude producer to effectively carry the crude on Indian land, from which India can use it in case of emergency without having to own the inventory, and several Asian economies have resorted to such measures to make their limited reserves stretch even further than they would with a purely domestic build.

Those within the energy policy world will rightly observe that capacity announced is not capacity built, and that India's reserve expansion has a long history of slipping timelines both the Chandikhol and Padur expansions are part of a phase-two programme approved as far back as 2021, but only now starting to get real traction. The difference between the eight days of cover India had at the start of the Iran war and the ninety day international benchmark is still huge and even if the optimistic forty day target on the table is met, India will be thinner on reserves than most of its Asian peers, let alone the U.S. which still has about three hundred and forty million barrels in its own reserve after years of drawdowns, or Japan, which entered the crisis with around two hundred and sixty million barrels despite getting more than ninety-four per cent of its crude from the Middle East.

This time around, what changes the political calculus is the abstraction of energy security is now reality. A finance ministry that boasts a relatively tame fiscal deficit was forced to slash fuel taxes mid-crisis to prevent prices at the pump from becoming a political albatross, while ceramics factories shut down for lack of gas and households lined up at pumps. Memories like that last long after the news event that gives rise to it - and it's the sort of memory that can elevate one cave announcement to five locations across the nation in a matter of weeks. Whether New Delhi can deliver that programme in the time frame it has set itself, as crude remains relatively cheap and before the next geopolitical flash point resets the clock, will give a good indication of whether this is the moment India has taken a step toward closing its energy security gap, or simply the moment it tried.