Oil crisis tests India’s readiness

The escalating conflict in West Asia, especially the ongoing tensions involving Iran, Israel, and the United States, is sending ripples through global energy markets, raising questions about the future of oil supplies. For India, a major oil importer, the government insists there is no immediate cause for alarm. Fuel supplies across the country remain stable, and refineries have been instructed to prioritize household LPG production to ensure domestic cooking gas needs are met before commercial or industrial demand. To discourage hoarding, the waiting period for LPG cylinder bookings has been increased from 21 to 25 days.

Officials have also clarified that there are no plans to raise petrol and diesel prices in the near term, nor any consideration for cutting duties on petroleum products. The government is aiming to balance consumer interests with the realities of volatile energy markets, ensuring availability while managing costs and risks. Diplomatic efforts continue to support Indian energy enterprises navigating the uncertainty abroad.

External Affairs Minister Dr. S. Jaishankar outlined India’s three-pronged approach: promoting peace, de-escalation, and civilian safety through dialogue; safeguarding the Indian community in the conflict region through coordination with local authorities; and protecting national interests, including energy security and trade.

Amid global crude volatility linked to the Iran-Israel conflict, the government has ramped up LPG production and adjusted refinery product mixes to prioritize households. A recent Rs 60 increase in LPG cylinder prices has been described as moderate, translating to roughly Rs 20 per person per day for a family of four, and remains adjustable depending on market conditions. Strategic reserves are reported to be sufficient, with visibility into supplies maintained even under uncertainty. India has declined external requests for petroleum products to ensure domestic needs remain the top priority.

A former ambassador noted that India, heavily reliant on West Asia for oil, is likely following a known contingency playbook. While price increases and market shocks are inevitable, preparations appear robust. However, broader consequences could affect remittances, diaspora safety, and foreign investments, prompting calls for parliamentary discussion. Opposition leaders defended disruptions in parliament, citing constituent concerns about fuel costs, stranded relatives, and wider uncertainties that cannot be addressed through brief statements.

A BJP spokesperson dismissed the opposition’s criticism as political theater, highlighting India’s resilience amid global volatility, adequate stockpiles, prioritization of domestic LPG, and schemes like PM Ujjwala Yojana for the poor. She emphasized that petrol and diesel prices would remain stable unless crude exceeds $130 per barrel, contrasting current measures with past crises, such as the 2013 seizure of an Indian tanker by Iran.

Trade experts view India’s strategic reserves positively, pointing to early actions, incoming US LNG shipments, and strong domestic LPG production. Global supply cuts, including a 14-15% reduction in crude flow and a 20% drop in LNG, have caused Brent crude to swing from $65 to $120 per barrel, settling near $102 after G7 reserve releases. Each $10 rise in crude adds roughly 0.3% to inflation and impacts the current account, highlighting the link between global pricing and domestic economic pressures. The ongoing conflict carries serious economic risks for India. Any extended disruption in the Strait of Hormuz could tighten global crude supplies, increase shipping costs, and strain fuel distribution chains. Rising oil and gas prices may drive up costs for petrol, diesel, and LPG, affecting inflation, aviation, transport, and overall economic stability. Questions remain about whether India’s energy buffers—strategic reserves and diversified import sources—are sufficient to protect consumers if tensions persist, and whether a full parliamentary debate is warranted.

The session reflected sharp political divides. The government is emphasizing preparedness and consumer protection amid a volatile global scenario, while the opposition seeks broader accountability and discussion. As the crisis unfolds, India’s challenge will be to maintain a balance between diplomacy, energy security, and domestic stability.