Two-thirds of India's crude oil requirements are met through imports. The government is cautious about the crisis in Iraq, which is the second-largest oil supplier after Saudi Arabia.
"We are watchful and cautious. We are hopeful that Iraq crisis will blow over. There is no reason to panic as far as India is concerned... I don't see any immediate reason for panic," Finance Secretary Arvind Mayaram told reporters on the sidelines of an event on commodity markets.
He said there won't be any disruptions in oil supply as the country's long-term oil contracts are stable.
"As far as India's long-term supply is concerned, we are fairly well established and I don't see any disruptions. There is a need to remain calm and the government is fully watchful," he said, adding that the markets must also remain calm.
Yesterday, global Brent crude oil prices had hit nine-month high of about USD 115 per barrel after militants closed in on Iraq's capital Baghdad, fuelling fears over supplies from the major crude producer.
US President Barack Obama had said his national security team "is looking at all the options" to help the Iraqi government.
Iraq has the world's fifth largest proven reserves and pumps an average of about 3.5 million barrels of oil per day.