India’s 4-Day Strategic Oil Buffer Risks Huge Inflation Shock Amid Escalating West Asia War: Report

India’s limited strategic crude oil reserves—currently covering just four to five days of domestic consumption—pose a major inflation risk as geopolitical tensions in West Asia escalate, according to a new report by consultancy firm EY. The Economy Watch May 2026 report highlights India’s vulnerability to global supply shocks, particularly in energy and critical commodities like fertilizers and rare earth materials, which could drive up fuel, food, and household costs. EY warns that India’s current account deficit and inflation may worsen if oil prices remain high, with global crude averaging USD 103.9 per barrel in April 2026—the highest since July 2022. The report urges India to build larger reserves of crude oil, LPG, fertilizers, rare earth materials, and essential medicines to protect consumers from sudden price spikes during conflicts or disruptions. Comparing India’s reserves unfavorably to those of China and Japan, EY emphasizes the need for strategic stockpiling to mitigate economic instability. The consultancy also advises diversifying energy imports and accelerating green energy adoption, including electric vehicles and domestic production, to reduce long-term reliance on fossil fuels. Beyond oil, the report stresses the importance of securing vulnerable supply chains and trade routes, recommending faster development of alternative corridors like the India-Middle East-Europe Economic Corridor (IMEC) and Indo-Pacific routes. EY concludes that India must recast its growth strategy to prioritize economic security alongside growth, given its heavy dependence on imports and the shifting global trade landscape.