The ongoing war between the United States and Iran has begun affecting global petroleum supply chains, raising serious concerns over Nepal’s energy security due to its limited storage capacity and complete dependence on India for fuel imports.
Nepal relies entirely on India’s state-owned Indian Oil Corporation (IOC) for petroleum supplies. India, in turn, imports more than 80 percent of its crude oil from Middle Eastern countries. Trade expert Ravi Shankar Sainju warned that any disruption to India’s oil supply due to the US–Iran conflict could trigger a fuel crisis in Nepal.
“A supply chain disruption would prompt India to prioritise its domestic needs, and in such a situation, there would be no guarantee of regular fuel supplies to Nepal,” Sainju said. A shortage of petroleum products would disrupt industries and transportation, causing prices of food and non-food items to soar, he added.
Limited Progress on Storage Expansion
Following the 2015 Indian blockade, the government had issued a white paper pledging to build petroleum storage infrastructure sufficient to meet at least three months of national demand. However, nearly a decade later, the target has yet to be achieved.
According to the Nepal Oil Corporation (NOC), the country’s existing infrastructure can store fuel sufficient for only 13 days at full capacity.
Prior to the 2015 blockade, NOC’s total fuel storage capacity stood at 68,115 kilolitres. After petroleum imports began via the Motihari–Amlekhgunj pipeline, storage capacity increased. The corporation added 18,000 kilolitres in Amlekhgunj and 10,000 kilolitres in Pokhara. Additional storage tanks were also constructed in Bhadrapur (Jhapa), Dang and Janakpur.
Since September 2019, diesel has been supplied regularly through the pipeline, and petrol has also been imported through the pipeline over the past year.
Previously, storage capacity included 10,892 kilolitres of petrol, 44,773 kilolitres of diesel, 4,329 kilolitres of kerosene and 8,121 kilolitres of aviation fuel. Following upgrades, petrol storage capacity has increased to 28,542 kilolitres, diesel to 60,401 kilolitres, and aviation fuel stands at 8,120 kilolitres. Kerosene storage capacity is currently 4,195 kilolitres.
Overall, NOC’s total petroleum storage capacity now stands at 102,000 kilolitres.
Current Stock Enough for Around 10 Days
NOC spokesperson Manoj Kumar Thakur said the Middle East tensions have not immediately affected Nepal’s fuel supply. However, he cautioned that a prolonged conflict could alter the situation.
“There is no shortage at present. But if the war drags on and disrupts supply chains, it is difficult to predict the outcome,” Thakur said.
According to NOC, only about 80 percent of total storage capacity is currently filled. While full storage could meet demand for 13 days, existing stock would be sufficient for a maximum of 10 days.
At present, storage capacity can meet 13 days of petrol and diesel demand, 42 days of kerosene demand, and 10 days of aviation fuel demand. However, Nepal has no storage capacity for cooking gas.
Daily consumption in Nepal stands at around 5,000 kilolitres of petrol and approximately 8,500 kilolitres of diesel. As diesel demand exceeds that of petrol, officials say special attention is required in managing diesel supplies.
Strategic Importance of Strait of Hormuz
From an energy security perspective, the Strait of Hormuz is one of the world’s most critical oil transit routes. Located between Iran, the United Arab Emirates and Oman, the narrow waterway handles around 20 percent of global oil shipments.
Cargo movement through the area has been significantly disrupted, contributing to rising crude oil prices. The world’s largest container shipping company, Maersk, has already announced the suspension of its vessels through the Strait of Hormuz citing security concerns.
According to Reuters, global crude oil prices have climbed to around $70 per barrel, the highest level since August 2025.
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