India appears to be gradually transitioning from a period of energy-related uncertainty back towards normalcy. Commercial LPG prices have declined, fuel costs have begun easing in some segments, and global crude oil prices have fallen significantly following a reduction in tensions in West Asia and the gradual resumption of shipping through the Strait of Hormuz.
This relief follows a four-month period during which India faced one of its most significant energy security challenges in recent years after disruptions in the Strait of Hormuz caused by the West Asian conflict that began on February 28, 2026.
The Strait of Hormuz is a critical global energy corridor, carrying nearly 20 per cent of the world’s seaborne crude oil along with substantial quantities of LPG and LNG. Its closure created serious concerns for India, which relies on imports for approximately 90 per cent of its crude oil requirements and around 60 per cent of its LPG consumption.
Despite these challenges, India managed to avoid fuel shortages, maintain uninterrupted LPG supplies and shield consumers from the full impact of surging global energy prices.
A combination of long-term infrastructure investments, diversified sourcing strategies, diplomatic engagement and rapid policy interventions enabled the country to navigate the crisis effectively.
Managing the Strait of Hormuz Disruption
The closure of the strategic waterway triggered a sharp rise in global energy prices. India’s crude oil basket rose from roughly $70 per barrel to over $120 per barrel, while Brent crude reached $126 per barrel.
Saudi Arabia’s LPG contract prices increased by nearly 46 per cent, pushing the import cost of a standard 14.2 kg LPG cylinder beyond Rs 1,600. At the same time, war-risk insurance premiums for oil tankers surged.
India faced three immediate priorities: securing uninterrupted fuel supplies, limiting the impact on domestic fuel prices and maintaining public confidence in the availability of energy resources.
Investments made over the past decade played a crucial role in addressing these challenges.
Between 2014 and 2026, India expanded its LPG import terminals from 11 to 22 and increased its LPG pipeline network from 2,311 kilometres to 6,242 kilometres. LPG import capacity nearly tripled to 32.3 MMTPA, while the number of countries supplying crude oil to India increased from 27 to 41.
During the same period, LNG terminals doubled from four to eight, city gas distribution networks expanded from 55 to more than 300, and strategic petroleum reserve capacity reached 5.33 million tonnes.
Ensuring Continuous Energy Supplies
Shortly after the crisis began, the government established an inter-ministerial coordination group involving the Ministries of External Affairs, Petroleum and Natural Gas, Ports, Shipping and Waterways, along with the Indian Navy.
The group identified Indian oil, LPG and LNG shipments stranded near the Strait of Hormuz and coordinated with Iranian authorities to facilitate their safe passage. Ongoing diplomatic engagement reportedly helped secure transit for Indian cargo without additional fees or taxes.
Simultaneously, senior Indian officials engaged key energy partners. The Petroleum Minister visited Qatar, the External Affairs Minister travelled to the United Arab Emirates and the National Security Adviser visited Saudi Arabia.
India also strengthened energy security by securing alternative supplies from countries including Russia, Brazil, Algeria, Venezuela, Canada, Japan and the United States.
Additional agreements, including an LPG import arrangement with the US and access to strategic reserves in other countries, further enhanced supply resilience.
Limiting the Impact on Fuel Prices
Although global crude oil prices reached record levels, the government sought to prevent the entire cost increase from being passed on to consumers.
On March 27, 2026, the Centre reduced excise duties on petrol and diesel by Rs 10 per litre, a measure estimated to cost around Rs 1.7 lakh crore in revenue.
Oil marketing companies absorbed losses for more than two months without raising retail fuel prices. When price revisions eventually became necessary, petrol and diesel prices increased by only Rs 3 per litre.
As a result, India experienced comparatively lower increases in fuel prices than many other major oil-importing nations during the crisis.
Maintaining LPG Availability
LPG supplies were expected to be particularly vulnerable because a large share of India’s imports originates from Gulf countries.
To address this risk, the government issued an LPG Control Order on March 8, directing refineries to maximise LPG production.
Within a week, domestic LPG output increased from approximately 35,000 tonnes per day to 54,000 tonnes per day. Additional refineries were also prepared to begin LPG production if required.
Even though import costs for a 14.2 kg cylinder rose above Rs 1,600, the retail price remained fixed at Rs 942 for domestic consumers. Beneficiaries of the Pradhan Mantri Ujjwala Yojana continued receiving a subsidy of Rs 300 per cylinder, reducing their effective cost to Rs 642.
More than 10.58 crore households benefited from this support, while the government and oil marketing companies absorbed substantial additional costs to protect consumers.
As supply conditions improved, restrictions imposed during the crisis were gradually lifted.
Following a review of fuel availability, authorities restored non-domestic packaged LPG supplies to pre-crisis levels, citing increased domestic production and the recovery of imported LPG shipments.
This step marked a significant move from emergency management towards normalisation.
Demand Management Measures
Alongside supply-side interventions, the government introduced measures aimed at reducing overall LPG demand.
Commercial LPG consumption was restricted, industries were encouraged to switch to piped natural gas where possible, large establishments were permitted to use alternative fuels temporarily, and 5 kg free-trade LPG cylinders were made available to migrant workers.
These measures helped reduce daily LPG demand from around 90,000 tonnes to approximately 70,000 tonnes.
The expansion of India’s natural gas infrastructure also proved beneficial. The growth of LNG terminals and city gas distribution networks ensured uninterrupted supplies of piped natural gas to both households and industries, reducing dependence on imported LPG.
Moving Towards Recovery
India’s response involved more than simply maintaining fuel availability.
Through tax reductions, LPG subsidies and financial support for oil marketing companies, the government absorbed a significant portion of the global energy shock, preventing consumers from bearing the full burden of rising international prices.
Despite crude oil temporarily exceeding $120 per barrel and LPG import costs rising sharply, the country avoided fuel rationing, major shortages and the steep retail price increases experienced in several other economies.
Broader economic indicators also remained relatively stable. Foreign exchange reserves stayed above $728 billion, economic growth remained resilient, the current account deficit stayed manageable and inflation remained within the Reserve Bank of India’s target range.
Today, the outlook is considerably more favourable than it was during the height of the crisis. Commercial LPG supplies have returned to pre-crisis levels, global crude prices have retreated significantly and fuel costs have begun easing in certain segments as supply pressures diminish.
Although uncertainties remain and energy markets continue to monitor developments in West Asia, the immediate threat to India’s fuel security appears to have largely subsided.
The episode also underscored the value of sustained investment in energy infrastructure, diversification of supply sources and long-term strategic planning in helping India withstand a major global energy disruption.
