New Delhi: India has tightened access to domestic cooking gas as the escalating conflict in West Asia threatens fuel supplies and drives volatility in global energy markets.
The Centre has prioritized household LPG (liquefied petroleum gas) consumption, and introduced a lock-in period between cylinder bookings, two people aware of the matter said.
“The priority for LPG supply in this situation is domestic consumers. Further, in order to curb hoarding of cooking gas, a 25-day lock-in period has been implemented,” one of the two people mentioned above said on condition of anonymity. The earlier lock-in period was initially around 15 days, which was raised to 21 days last week.
To be sure, the move may result in supply constraints for industrial users like ceramics makers, and commercial consumers such as hotels and restaurants.
In a late night statement, the petroleum ministry said it has formed a committee of three executive directors of oil marketing companies to examine the LPG requirements of restaurant and automobile sectors, and try to provide some volumes to them.
As reported by Mint, the ministry of petroleum and natural has also asked refiners to increase LPG production by diverting feedstock away from the manufacture of non-essential products, including petrochemicals.
The measures come amid a sharp surge in global oil prices that is raising concerns of wider disruption across the energy supply chain. On Monday, Brent crude prices surged over 25% to cross the $100-per-barrel mark for the first time in four years.
“All oil refining companies operating in India shall maximize and ensure that propane and butane streams produced, recovered, fractionated or otherwise available with them are utilized for production of LPG and make it available to the three public-sector OMCs, IOCL, HPCL and BPCL only,” read the order dated 5 March.
Further, in a revised order issued on Monday, the government said all oil refining companies in the country, including those in special economic zones (SEZs) and petrochemical complexes, must maximize and ensure that the entire production of C3 and C4 streams—including propane, butane and other related gases—is diverted for the production of domestic LPG.
India is one of the world’s largest LPG importers and relies heavily on West Asian supplies, mostly from Saudi Arabia, Qatar and UAE, and the current disruption in the region could tighten availability for the country. India’s LPG imports in FY25 stood at $12.47 billion, producing 12.8 million tonnes. Imports in FY26 had already touched $11.25 billion by January.
The LPG used in India comprises 60% butane and 40% propane. West Asian exports are butane-heavy and, thus, better suited for India as their LPG is a byproduct of oil processing.
In January, India began receiving its first major contracted volumes of LPG from the US under a new long-term agreement expected to cover roughly 10% of the country’s total LPG imports. Unlike West Asian supplies, these US shipments are propane-heavy, as LPG in the US is primarily produced as a byproduct of natural gas processing rather than crude oil refining.
India is also looking at more sources for LPG imports such as Australia and Algeria, the first person added.
Oil rising
Meanwhile, global oil prices are on a sharp upward curve as flows from West Asia face growing disruption following the closure of the Strait of Hormuz, a narrow waterway that typically handles about one-fifth of oil trade.
After trading near $120 per barrel on Monday, crude oil prices eased amid reports of the G7 countries considering release of oil from their strategic reserves. At the time of writing this story, the benchmark Brent crude on the Intercontinental Exchange was trading at $101.81 per barrel, higher by 9.84% from its previous close.
The G7 countries on Monday held a meeting to discuss the release of oil from the reserves of the member states of the International Energy Agency. A Reuters report said there was a broad agreement not to release stocks as of now. There was an initial consideration to release 400 million barrels of crude from their strategic reserves, according to reports.
The Reuters report said that the countries are ready to take “necessary measures” to support the global supply of energy, including the release of stockpiles, but stopped short of doing it now.
However, a third Indian official said the country is unlikely to participate in this exercise this time—in 2022 after the Russia-Ukraine war broke out, it had released stocks in line with major economies to ease global supply concerns and prices.
“The priority of the government is to meet the demand within the country,” said the third official, who also requested anonymity. “Further, India has no role in the current situation in lifting the prices, so it is unlikely that the country would participate in this process.”
Further, the minister for external affairs, S. Jaishankar, in a statement in Lok Sabha on the ongoing conflict said, “The interests of the Indian consumer has and will always be the overriding priority. Where required, Indian diplomacy has supported the endeavours of our energy enterprises in this volatile situation.”
With India importing nearly 90% of its oil requirement, the surge in prices has a significant impact on the country’s import bill. According to estimates, an increase of $1 per barrel for a year increases the annual import bill by about ₹16,000 crore.
Inflation impact
In a written reply to a question on the impact of the high crude prices on inflation, Union finance minister Nirmala Sitharaman on Monday told the Parliament that the price of both global crude oil and the Indian basket has been on a declining trajectory for the past one year, till the West Asia conflict began on 28 February 2026.
“Between the end of February and up till 2nd March 2026, the Crude Oil FOB Price (Indian Basket) rose from 69.01/barrel to 80.16/barrel. Given that India’s inflation is near the lower bound, the impact on inflation is not estimated to be substantial at this point,” she said.
According to Madan Sabnavis, chief economist of Bank of Baroda, India’s current account deficit, inflation and trade with West Asian countries will be impacted.
“The WPI (whole price index) will see a rise due to increase in energy prices. Overall fuel and energy products comprise around 10% of the index,” Sabnavis said. “Although in the current scenario, no major impact is seen on retail inflation, but as LPG prices have already been raised, if petrol and diesel prices are also increased, it will affect the country’s retail inflation.”
Prashant Vasisht, senior vice president and co-group head, corporate ratings, Icra Ltd, pointed out that even when oil prices last went above $100 per barrel in 2022 at the start of the Russia-Ukraine war, retail fuel prices were not hiked.
“The oil marketing companies were making profits or receiving higher marketing margins when prices were in the range of $60-75 in the past few months,” he said. “However, it needs to be seen how long the conflict continues. If oil prices persist above $100 per barrel it would significantly impact the marketing margins of the OMCs.”
Background of the conflict
The West Asia conflict started after the US and Israel launched strikes on Iran more than a week ago, triggering retaliatory attacks and widening the conflict across the region.
Israel has carried out fresh strikes on Lebanon, while energy infrastructure across Iran—including desalination plants and oil depots—has reportedly come under attack.
Iran on Sunday named Mojataba Khamenei, the son of former leader Ali Khamenei, as the country’s Supreme Leader, according to the semi-official Fars news agency. The Islamic Revolutionary Guard Corps (IRGC) pledged obedience to the new leader. Mojtaba Khamenei is believed to be close to the IRGC, signalling continuity in Iran’s hardline posture.
The conflict has already drawn in more than a dozen countries and is raising fears of a broader geopolitical crisis.