India is currently facing a challenging energy landscape, where global geopolitical tensions are directly impacting the common man’s kitchen and the country’s economic stability. The recent outbreak of conflict between Iran and Israel has severely disrupted the global oil and gas supply chain. India, which is heavily dependent on imports for its energy needs, has come directly into the line of fire of this crisis. As a result of this tense situation, the government has had to take the tough decision of significantly increasing cooking gas prices at the domestic level.
Let us understand the various aspects of this energy crisis and what this situation means for investors and consumers.
What’s Happening?
India has increased the price of LPG cylinders, marking the first hike in nearly a year. In Delhi, the price of a 14.2 kg domestic LPG cylinder has risen by Rs 60 to Rs 913, representing a 7% increase. Meanwhile, the price of a 19 kg commercial cylinder has increased by Rs 114.5 to Rs 1,883. Ujjwala Yojana beneficiaries continue to receive a subsidy of Rs 300, meaning they will pay only Rs 613.
The government maintains that the increase is not excessive. On average, one cylinder lasts about three months; therefore, the additional daily expense for a family of four is estimated at around 80 paise, or roughly 20 paise per person. Over the last few years, the total increase has been about Rs 110. Furthermore, LPG prices in India remain lower than in neighbouring countries: around Rs 1,207 in Kathmandu, Rs 1,241 in Sri Lanka, and Rs 1,046 in Pakistan.
This hike is mainly attributed to the rise in the Saudi Contract Price (CP), which increased by 16% between November 2025 and February 2026. A major factor behind this rise is the ongoing geopolitical tensions in the Middle East, which have disrupted regional energy supply chains. India is the world’s second-largest LPG importer. Last year, the country consumed 33.15 million metric tonnes of LPG, with imports accounting for nearly two-thirds of the total.
In 2024-25, consumption stood at 31.3 million tonnes, while domestic production was only 12.8 million tonnes. Approximately 85% to 90% of imports pass through the Strait of Hormuz, a critical route currently affected by the conflict. India has around 33.3 crore LPG consumers, including nearly 10.5 crore Ujjwala beneficiaries.
Swift Government Response
Given the crisis, the government has taken immediate steps. On March 5, 2026, using emergency powers under the Essential Commodities Act, 1955, all refineries were directed to maximise LPG production from propane and butane. This additional production is strictly meant for domestic use and will be supplied only to the three public sector companies: Indian Oil, Bharat Petroleum, and Hindustan Petroleum. These stocks cannot be diverted for petrochemicals or other products.
The government has also asked refineries to increase production further to ensure that no shortage occurs. Additionally, to strengthen energy security, an import contract for 2.2 million tonnes of LPG has been signed with the US Gulf Coast, accounting for about 10% of the country’s total imports. These cargoes have already started arriving. Russia remains India’s largest crude oil supplier, and imports from the country continue. The United States has also provided a 30-day waiver. Retail prices for petrol and diesel have not increased as Oil Marketing Companies (OMCs) currently have sufficient pricing cushion.
Broad Impacts of the Crisis
The impact of this crisis is not limited to LPG prices alone. In Pune, gas-based crematoriums have been temporarily shut down. At the Vaikunth Crematorium, three gas furnaces have been closed, while five electric furnaces continue to operate. This decision, effective from March 5, was taken to prioritise propane and butane supplies for domestic LPG usage.
Natural gas supply has also been affected. The country’s daily consumption stands at about 195 million metric standard cubic metres, with more than 50% dependent on imports. Due to disruptions at Qatar’s LNG facilities and risks around the Strait of Hormuz, nearly 60 million metric standard cubic metres of supply have been impacted. As a result, companies are prioritising critical sectors such as auto fuel, domestic kitchens, and the fertiliser industry.
However, Petroleum and Natural Gas Minister Hardeep Puri has stated that there is no energy shortage in the country and consumers need not worry. In 2024-25, Oil Marketing Companies reported losses of around Rs 39,000 crore, for which the government provided compensation of Rs 30,000 crore. This highlights the government’s effort to shield domestic consumers from sharp price shocks.
What Does This Mean for Investors?
This crisis presents mixed signals for investors in Oil Marketing Companies and the refinery sector. On one hand, companies reported losses of around Rs 39,000 crore in 2024-25, although the government’s compensation of Rs 30,000 crore provided significant support. Now, with government directives pushing refineries to increase LPG production, domestic output may improve and help reduce reliance on imports.
The new import contract of 2.2 million tonnes from the United States is also an important step toward supply diversification, which could reduce long-term supply chain risks. At the same time, the decision to keep petrol and diesel prices stable helps maintain a pricing cushion for companies and supports margin stability. Overall, the sector may present opportunities linked to energy security and increased domestic production capacity, especially with continued government support.
What’s Next?
In the coming months, the government will likely focus on further diversifying import sources. Increasing imports from the United States and strengthening domestic production are steps in the right direction. If the conflict persists, global price fluctuations may continue, but policy measures such as those under the Essential Commodities Act can help prevent shortages.
The search for alternative natural gas sources is also expected to continue in order to ensure uninterrupted supply to critical sectors. Overall, this crisis presents India with an opportunity to strengthen its long-term energy security. Both investors and policymakers will need to adopt a long-term perspective as the global energy landscape continues to evolve.
Disclaimer: This article is for educational and informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. The companies mentioned are cited as examples within the context of market developments. Investors are advised to conduct their own due diligence and consult their financial advisor before making any investment decisions.
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