India may ease emergency fuel curbs once global tensions ease: Official

Measures on LPG monitoring, gas allocation and fuel hoarding were imposed to protect domestic supply after disruptions around the Strait of Hormuz

The government is likely to review and gradually roll back emergency energy-security measures introduced in response to heightened tensions in West Asia once the global situation stabilises, a government official said on Thursday.

 

The measures include enhanced monitoring of liquefied petroleum gas (LPG) supplies, reprioritisation of domestic natural gas allocations and tighter controls to prevent fuel hoarding.

 

They were introduced to safeguard domestic energy availability amid concerns over potential disruptions to global oil and gas supply chains. Business Standard had earlier reported on the Centre’s emergency fuel and LPG measures after tensions around the Strait of Hormuz escalated.

 

 

The US and Iran have released the text of an interim agreement their presidents have signed to end their 111-day war. The pact could potentially reopen or normalise shipping through the Strait of Hormuz, providing significant relief for India, one of the world’s largest crude importers.

 

“We have been reviewing the evolving situation. The measures which we took will be reviewed and eased once we get the confidence that situation globally has normalised,” the official said.

 

The emergency steps were preventive and aimed at ensuring uninterrupted supplies of essential fuels during a period of heightened geopolitical uncertainty.

 

“As the international situation normalises and supply risks recede, the government will review these restrictions and consider their phased withdrawal.”

Why Hormuz matters

The Strait of Hormuz, the narrow waterway between Iran and Oman, handles roughly a fifth of global oil consumption. It is the primary export route for major Gulf producers, including Saudi Arabia, Iraq, Kuwait, the United Arab Emirates and Qatar, all key energy suppliers to India.

 

Supply of crude oil and natural gas through the Strait was disrupted since the Iran war began at the end of February. Crude oil is used to make fuels such as petrol and diesel, while natural gas is used to generate electricity, produce fertiliser, make compressed natural gas (CNG) for automobiles and supply piped cooking gas to households.

 

The disruption triggered sharp increases in crude oil prices, shipping insurance premiums and freight rates. Sources said the reopening and reduction in tensions would likely help stabilise global energy markets and improve the outlook for energy-importing nations such as India.

 

India, the world’s third-largest oil importer and consumer, rolled out contingency measures after the escalation of hostilities in West Asia, a region that accounts for a substantial share of the country’s crude oil and LPG imports.

What curbs were imposed?

The government invoked the LPG (Supply and Distribution Regulation) Order, empowering authorities to closely monitor inventories, prevent diversion of domestic cylinders and crack down on hoarding or black-market sales.

 

State governments and oil marketing companies were directed to maintain heightened surveillance over LPG distribution networks and ensure uninterrupted supplies to households and essential services.

 

Refiners were asked to maximise LPG production by diverting streams previously used for petrochemical production. Usage at the consumer end was also regulated by increasing the period of refill booking and cutting supplies to commercial users such as hotels and restaurants.

 

In parallel, the Ministry of Petroleum and Natural Gas initiated a reprioritisation framework for domestic natural gas supplies. City gas distribution networks serving households and transport, and the fertiliser sector, were placed ahead of less critical industrial consumers in the event of supply disruptions.

 

Public-sector fuel retailers were also instructed to strengthen inventory management and discourage panic buying. Measures included enforcing minimum intervals between LPG cylinder bookings, restricting unusually large purchases of petrol and diesel by non-contract customers, and monitoring retail outlets for abnormal demand patterns.

 

The official said the steps were designed as precautionary safeguards to preserve strategic fuel stocks, maintain market stability and ensure essential consumers continued to receive uninterrupted energy supplies if geopolitical tensions affected global energy trade flows.

Price pressure remains

Oil prices have, over the past couple of days, fallen to a three-month low, but retail petrol and diesel prices are still lower than their international benchmarks, the official said. Business Standard had reported that oil prices fell after the US and Iran reached a deal to halt the war and resume traffic through the Strait of Hormuz.

 

Global oil prices had risen to as high as $119 per barrel at the peak of war-related disruption, from $70-72 a barrel in February. This increased the cost of producing petrol and diesel, but the government held on to retail rate revisions till mid-May.

 

On March 27, the government slashed excise duty on petrol and diesel by ₹10 per litre each in a bid to avoid a retail price increase just when five critical states, including West Bengal, went to polls.

 

After the Assembly elections, retail petrol and diesel prices were raised by about ₹7.50 per litre each, while CNG rates were up by ₹6 per kg. LPG prices were increased by ₹89 per 14.2-kg cylinder, used by households for cooking, in two instalments.

 

Despite the price increases, state-owned oil companies continue to lose about ₹550 crore a day as retail rates lag cost, the official said. International prices were hovering around $78 per barrel on Thursday.

 

The likely rollback, therefore, will depend not only on the formal reopening of shipping channels but also on whether lower oil prices and freight costs hold long enough for the government to be confident that emergency controls are no longer needed. 

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  (With inputs from agencies)