As war continues to rage across West Asia and the Strait of Hormuz remains partially disrupted, the world is staring at one of the worst energy shocks in recent decades.
Crude oil prices have surged from around 70 dollars per barrel to nearly 126 dollars. Countries are battling fuel shortages, governments are imposing emergency restrictions, and consumers across the world are paying record prices for petrol and diesel.
Yet, in the middle of this global chaos, India has managed to keep fuel prices largely stable.
Petrol prices in Hong Kong are nearing Rs 295 per litre. Singapore is around Rs 240. Prices in the Netherlands have crossed Rs 225, while Italy, Germany, France and Britain are all facing fuel prices close to or above Rs 200 per litre.
India, however, continues to sell petrol at around Rs 95 per litre in several cities without a major price shock.
But that relief may not last forever.
Even as India has so far avoided a steep fuel price hike, pressure is rapidly building on the government and oil companies. Top government sources told IndiaToday.in that petrol and diesel prices may soon be increased by around Rs 4-5 per litre, while domestic LPG cylinders could see a hike of nearly Rs 40-50.
Sources said a final decision is likely within the next 5-7 days as the Centre reviews the growing financial strain on oil marketing companies amid soaring crude prices. If approved, this would be the first increase in petrol and diesel prices in nearly four years.
That contrast has triggered a larger question: how has India managed to avoid a full-blown fuel crisis while much of the world struggles with soaring costs and supply disruptions?
WORLD BATTLING FUEL EMERGENCY
The impact of the West Asia conflict has been severe across multiple countries.
Bangladesh has imposed fuel rationing. Sri Lanka moved to a four-day work week to reduce fuel consumption. The Philippines declared a national energy emergency. Pakistan cut government office operations to four days a week.
South Korea introduced a fuel price cap for the first time in three decades.
But India has avoided fuel rationing, long queues outside petrol pumps, school closures or large-scale supply disruptions.
Behind that stability lies a costly balancing act involving tax cuts, supply diversification, emergency energy planning and massive financial support from the government and public oil companies.
INDIA’S RAPID RESPONSE
According to officials and energy experts, the government moved quickly after the crisis escalated.
Within eight days of the disruption beginning, the Centre implemented an LPG Control Order and instructed refineries to sharply increase domestic LPG production.
Daily LPG output reportedly rose from around 36,000 tonnes to nearly 54,000 tonnes.
On March 27, excise duty on petrol was slashed from Rs 13 to Rs 3 per litre, while diesel excise duty was almost entirely removed.
The strategy was clear: shield consumers from the full impact of the global oil shock.
At the peak of international prices, the government and oil marketing companies were effectively absorbing nearly Rs 24 per litre on petrol and around Rs 30 per litre on diesel.
THE MASSIVE COST OF KEEPING PRICES LOW
The relief, however, has come at a massive financial cost.
Between mid-March and the end of April, state-run oil companies including Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum reportedly suffered huge under-recoveries.
Officials estimate that without excise duty cuts, the losses could have crossed Rs 62,500 crore.
Even after tax reductions, oil marketing companies are still estimated to have absorbed nearly Rs 30,000 crore in losses.
In simple terms, the government and public sector oil companies are paying cash to prevent fuel prices from exploding for consumers.
And experts warn that such a model may not remain sustainable indefinitely if the conflict drags on.
HOW INDIA AVOIDED SUPPLY DISRUPTION
India’s challenge was not limited to controlling prices. Ensuring uninterrupted fuel supply across the country became equally critical.
Despite global shipping disruptions, India managed to avoid LPG shortages and widespread fuel scarcity.
Refineries are reportedly operating at more than 100 per cent capacity, while crude oil imports have been diversified aggressively.
India increased purchases from Russia, the US, West Africa and other alternative suppliers to reduce dependence on disrupted routes in West Asia.
Energy experts believe the current stability is also the result of years of infrastructure expansion and long-term energy planning.
In 2014, India had 11 LPG terminals. That number has now doubled to 22.
Crude sourcing has expanded from 27 countries to around 40 countries. Ethanol blending has risen from 1.5 per cent to nearly 20 per cent.
Strategic petroleum reserves were also built to deal with emergencies like the current crisis.
‘THIS LEVEL OF CRISIS NEVER SEEN BEFORE’
Former Indian Oil Corporation chairman B Ashok said the priority was to protect ordinary consumers from the immediate impact of the global conflict.
“The basic principle has been to shield the common consumer from the impact of the global conflict. Despite the rise in international crude and fuel prices, the burden has not been passed entirely to consumers,” he said.
Ashok said the government reduced excise duty by Rs 10 per litre and imposed temporary export restrictions to maintain adequate domestic supply.
He added that LPG production was increased by nearly 50 per cent and domestic consumers were given priority in LPG and PNG supply.
However, he warned that the present situation may not remain sustainable for long.
“This level of crisis has never been seen before. Earlier conflicts affected supply only for days or weeks. This conflict is now entering its third month with no clear end in sight,” he said.
According to Ashok, if the conflict continues, India may eventually have to share the burden through higher prices, tax rationalisation by states and tighter energy management.
“Otherwise, the country could face supply disruption, economic slowdown and weakening of the energy sector,” he warned.
INDIA STILL VULNERABLE TO WEST ASIA
Former UAE ambassador Sunjay Sudhir said India remains heavily dependent on West Asia despite recent diversification.
“Nearly 50 per cent of our crude oil, 90 per cent of LPG and 60 per cent of gas still comes from Gulf countries,” he said.
Sudhir said India has already started shifting imports towards Russia, the US, Iran, Nigeria and Angola to reduce immediate pressure.
He also pointed to UAE’s decision to move away from OPEC restrictions as a possible factor that may soften global prices.
But he cautioned that the government cannot indefinitely absorb losses through tax cuts and oil company under-recoveries.
“At some point, a decision will have to be taken, and fuel prices may rise in India as well,” he said.
For now, India has managed to avoid the panic seen elsewhere.
But with the war continuing and the Strait of Hormuz still unstable, the real test may lie in how long the country can continue protecting consumers from a crisis shaking the entire world economy.
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