THE ILLUSION OF PLENTY - A review

 

The world may appear to be swimming in oil, but that comfort is deceptive.

On paper, global inventories look massive. Billions of barrels exist across tanks, pipelines, ships, strategic reserves, and commercial storage. But in a real crisis, not every barrel can save the system. Some oil is trapped in pipelines. Some is the wrong grade. Some is sitting in the wrong country. Some is locked inside strategic reserves that governments release only under pressure. Some is already committed in transit.

That means the true cushion is far thinner than the headline numbers suggest.

Past oil shocks had escape routes. In 1973, spare capacity still existed. In 1990, Saudi Arabia could offset part of the lost supply after Iraq invaded Kuwait. In 2022, Russian oil did not fully disappear; it was redirected through discounts, longer routes, and shadow fleets.

But this time, the article argues, the system may not have the same safety valve.

If the Strait of Hormuz remains disrupted, the risk is not just higher oil prices. The deeper danger is that working inventories fall below the level needed to keep the system operating smoothly. Pipelines need pressure. Refineries need continuous crude. Terminals need minimum stock. Trucks, airlines, farms, factories, and supermarkets depend on diesel, jet fuel, petrochemicals, and logistics moving without interruption.

Once that operating cushion disappears, the crisis changes character.

It stops being a market problem and becomes an allocation problem.

Prices no longer simply signal scarcity. They become gates. Governments may step in with rationing, export controls, subsidies, emergency reserves, price controls, or mobility restrictions. Fuel may be directed first toward essential transport, agriculture, emergency services, and critical supply chains.

The frightening part is that the breakdown begins before the world “runs out” of oil. It begins when the oil that technically exists can no longer move to the right place, in the right form, at the right time.

That is the illusion of plenty.

The barrels are there.

But the buffer may not be.

 

HOW INDIA IS GOING TO COPE

 

The issue is no longer just “oil price may rise.” The bigger risk is physical access to usable oil and refined products if the Strait of Hormuz disruption continues.

J.P. Morgan’s warning is that global inventories may look large on paper, but many barrels are not immediately usable because they are in pipelines, tank bottoms, floating storage, strategic reserves, or in the wrong geography/grade. Their May 2026 note says if Hormuz is not reopened around June/July, inventories could hit an “operational stress point,” and if still closed by September, the system could hit a floor below roughly 7 billion barrels, where demand destruction and rationing become more likely.

More news around it

Reuters reported today that Saudi Aramco’s CEO warned the oil market could lose about 100 million barrels every week if the Strait of Hormuz remains closed. That is why the concern is not only Brent crude price, but the availability of diesel, jet fuel, LPG, refinery feedstock and shipping capacity.

Reuters also reported earlier that oil inventories and emergency reserves are being rapidly depleted, with executives warning that the full impact of the Hormuz closure may not yet have been felt because energy shocks hit with a lag.

For India, Reuters reported that the country is one of the most vulnerable major economies to a prolonged Middle East disruption because it is a fast-growing oil consumer and importer.

How India is trying to cope

India is preparing through six main buffers:

1. Diversifying crude oil suppliers

India is trying not to depend too heavily on one region. PPAC’s 2025–26 oil and gas Ready Reckoner says India expanded its crude sourcing network from 27 countries to 41 countries, and LNG imports from 18 countries.

In practical terms, this means India can buy more from Russia, Africa, the U.S., Latin America, and other non-Gulf suppliers when Middle East routes become risky. Reuters reported that India has been scouting alternative sources for crude oil, LPG and LNG because of the Hormuz disruption.

2. Using strategic petroleum reserves carefully

India has underground strategic petroleum reserves at Visakhapatnam, Mangaluru and Padur, and ISPRL says Phase-II reserves are proposed at Chandikhol in Odisha and Padur in Karnataka.

But this is not a full solution. India’s current SPR is relatively small compared with total national demand. It is useful as an emergency cushion, but not enough for a long crisis. That is why India must combine SPR release with import diversification, demand control and refinery planning.

3. Keeping refineries running and managing product mix

India has strong refining capacity and PPAC notes that India is a net exporter of petroleum products, even though it imports crude.

This helps India because it can process different crude grades and manage domestic supply of petrol, diesel, ATF, LPG and other products. In a crisis, the government can prioritize diesel for trucks, agriculture, railways, emergency services and essential logistics.

4. Increasing LPG and product sourcing from non-Gulf routes

Reuters reported that India had secured about 60 days of oil supply amid Hormuz disruption and was increasing LPG sourcing from countries such as the U.S., Russia and Australia. The same report said India had stable domestic petrol and diesel supplies at that time.

This matters because Indian households depend heavily on LPG. A crude shock is painful, but an LPG shortage becomes politically and socially sensitive very quickly.

5. Ethanol blending and alternate fuels

India is reducing petrol dependence through ethanol blending. PPAC reported ethanol blending in petrol was 19.8% in September 2025, with cumulative blending at 19.2% during November 2024–September 2025.

This does not eliminate oil dependence, but it reduces the volume of petrol India needs to import or refine from crude. Over time, CNG, EVs, biofuels and green hydrogen also become part of the resilience strategy.

6. Renewable energy and electrification

India is also reducing long-term imported fuel risk by expanding non-fossil electricity. A March 2026 official power ministry document says India’s non-fossil installed capacity was 52.3% of total installed generation capacity as of January 31, 2026, with renewable energy at 50.6%.

This helps because the more India shifts transport, cooking, industry and cooling toward domestic electricity, solar, wind, hydro, nuclear and storage, the less exposed it becomes to oil chokepoints.

What India may do if the crisis worsens

India’s likely playbook would be:

First: release strategic reserves selectively, not all at once.
Second: ask oil marketing companies to build and manage higher inventories.
Third: secure more crude from Russia, Africa, the U.S., Latin America and non-Hormuz routes.
Fourth: prioritize diesel, LPG, aviation fuel and essential services.
Fifth: temporarily reduce exports of some refined products if domestic supply becomes tight.
Sixth: push citizens to conserve fuel and avoid panic buying.
Seventh: accelerate ethanol, CNG, EVs, solar and public transport adoption.

What citizens and businesses should learn from this

For normal households, the answer is not panic buying. The smart approach is:

Keep vehicles at least half full, avoid unnecessary travel, reduce fuel wastage, keep 2–4 weeks of essential household supplies, maintain emergency cash, avoid unnecessary debt, and plan alternate transport or work-from-home options.

For businesses, the key is logistics resilience: maintain backup suppliers, plan alternate routes, hold critical inventory, monitor fuel contracts, and prepare for higher transport costs.

The core message is simple: India cannot fully control global oil chokepoints, so it is preparing by diversifying suppliers, storing reserves, strengthening refineries, blending fuels, and reducing long-term dependence on imported crude.