Domestic LPG cylinder price hiked by ₹60 amid Iran war:Commercial cylinder ₹115 costlier; govt orders refineries to boost LPG production

The central government has increased the price of domestic LPG cylinders by ₹60. In Delhi, a 14.2 kg cylinder will now cost ₹913, up from ₹853 earlier. The price of a 19 kg commercial cylinder has also been increased by about ₹115 and will now cost ₹1,883. The revised prices came into effect on March 7. The government had last increased domestic LPG prices by ₹50 on April 8, 2025, while the price of commercial cylinders was raised by ₹31 on March 1 this year. The price hike comes amid concerns over a possible supply disruption due to the ongoing conflict involving the United States, Israel and Iran in West Asia. Government orders refineries to boost LPG production On March 5, the government directed oil refineries across the country to increase LPG production to prevent a potential shortage of cooking gas cylinders. Refineries have been instructed to prioritise the use of propane and butane for producing cooking gas. These fuels will be supplied to state-owned oil companies such as Indian Oil Corporation (IOC), Hindustan Petroleum (HPCL) and Bharat Petroleum (BPCL) to ensure uninterrupted LPG supply to consumers. Two key reasons behind supply concerns 1. Risk to the Strait of Hormuz route The ongoing conflict has raised concerns about disruptions in the Strait of Hormuz, a strategic waterway linking the Persian Gulf to the Arabian Sea. Nearly 20% of global petroleum shipments pass through this route. Countries such as Saudi Arabia, Iraq and Kuwait depend on it for exports. India imports around 50% of its crude oil and 54% of its LNG through this route. 2. LNG production disruption in Qatar Gas supply concerns have also increased after a drone attack disrupted LNG production in Qatar. India imports around 40% of its LNG requirements from Qatar, making the country a key supplier. CNG companies warn of supply crisis Amid the uncertainty, the Association of CGD Entities (ACE) has written to state-owned gas company GAIL seeking clarity on supply. Companies said that if contracted LNG supplies from Qatar are disrupted, they may be forced to buy gas from the spot market, where prices have surged to about $25 per unit, more than double the contracted price. They also warned that if CNG prices rise sharply, consumers may shift to electric vehicles, which could affect the gas sector. Impact on private companies The government’s decision could also impact private sector companies such as Reliance Industries. Diverting propane and butane to LPG production may reduce the production of petrochemical products such as alkylates and polypropylene, which typically fetch higher prices. Experts say this could reduce profit margins for companies involved in petrochemical manufacturing. India diversifying oil imports Despite the tensions, officials say there is no immediate need for panic. India has diversified its crude oil imports and is now sourcing about 20% of its crude from Russia, reducing dependence on the Strait of Hormuz route. Government sources also said the country currently has adequate reserves of petroleum and LPG. Legal provision behind the order The government issued the directive using powers under the Essential Commodities Act. The law allows authorities to regulate production and supply of essential goods during emergencies to prevent shortages. Similar measures were taken earlier during the Russia-Ukraine conflict, when refineries were directed to prioritise domestic fuel supply.