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India imports nearly two-thirds of its LPG consumption, with 85–90% sourced from the Gulf region
(Image/Reuters)
India is weighing a series of contingency measures — including restricting petrol and diesel exports, ramping up crude purchases from Russia and introducing demand-management steps such as LPG rationing — to address potential fuel shortages if traffic through the Strait of Hormuz remains disrupted for weeks, people familiar with discussions told the Economic Times (ET).
According to ET, the deliberations involve senior government officials and industry executives reviewing both supply- and demand-side options amid escalating tensions in West Asia.
Oil, Gas Prices Surge
Oil and gas markets reacted sharply on Monday. Brent crude futures rose nearly 10% to around $80 per barrel, while European natural gas prices jumped more than 40%. The spike followed widening conflict in West Asia and attacks on key energy facilities, including Saudi Arabia’s Ras Tanura refinery and a Qatari LNG plant, which triggered production shutdowns.
Tanker movement through the Strait of Hormuz remained sparse for a second straight day, heightening concerns over supply continuity and prompting officials and refiners to assess fallback options, ET reported.
LPG Seen as Most Vulnerable
While some industry observers believe Iran may struggle to sustain prolonged military escalation and that transit disruptions through Hormuz could normalise quickly, uncertainty remains. US President Donald Trump has indicated the conflict could stretch up to four weeks.
After a review meeting, oil minister Hardeep Puri said on X that the government is “continuously monitoring the evolving situation” and would take all necessary steps to ensure availability and affordability of key petroleum products.
One immediate step under consideration is curbing exports of petrol and diesel to prioritise domestic supply in an emergency, people cited by ET said.
India currently exports about one-third of its petrol output, roughly a quarter of diesel and nearly half of aviation turbine fuel (ATF). Refiners could also divert surplus ATF into other product streams if required.
The most immediate vulnerability is liquefied petroleum gas (LPG). India imports nearly two-thirds of its LPG consumption, with 85–90% sourced from the Gulf region. Inventory levels remain modest.
Less Than Two Weeks of Cover
Industry estimates suggest that existing stocks — including onshore inventories and cargoes that have already crossed the Strait — could cover less than two weeks of demand if fresh supplies are disrupted.
In response, state-run refiners Indian Oil, HPCL and BPCL have begun increasing LPG output at select integrated petrochemical refineries, ET reported.
Officials are also discussing targeted demand-management measures, including rationing LPG for households that have access to alternative fuels, particularly in rural areas.
India’s crude oil reserves can cover roughly 17–18 days of consumption, while petrol and diesel stocks provide about 20–21 days of cover. LNG inventories are estimated to last 10–12 days. Without new arrivals via Hormuz, these buffers would gradually erode. In recent months, the Gulf has accounted for about half of India’s crude and LNG imports.
Russian Oil as a Backup
Boosting imports of Russian crude is another option under active consideration. Significant volumes of Russian oil remain at sea and could be redirected relatively quickly to India, people told ET.
Sources added that if global supplies tighten further and prices rise sharply, Washington’s position could soften, potentially allowing Indian refiners to expand purchases of discounted Russian crude.
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March 03, 2026, 08:50 IST
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