Commercial LPG prices surge amid Hormuz crisis as government shields households from cooking gas shock

Cooking gas prices across India held steady for household consumers on Wednesday, but businesses and restaurants continued to reel under the weight of a sharp jump in commercial LPG rates, as the ongoing disruption in the Strait of Hormuz showed no signs of easing.

While domestic cylinder prices remained unchanged after a Rs 60 hike in March, commercial LPG users absorbed yet another blow, a Rs 993 increase in the latest revision, pushing prices in cities like Hyderabad and Patna well past the Rs 3,300 mark per 19-kg cylinder.

War in the Gulf, Pain at the Kitchen Counter

The root of the crisis lies far from India's borders. When Iran entered into armed conflict with the United States and Israel on February 28, it set off a chain of events that has since upended global energy markets. The Strait of Hormuz — a narrow waterway through which roughly a fifth of the world's oil and gas passes — came under effective blockade, triggering what the Ministry of Petroleum and Natural Gas has called the largest supply disruption of its kind.

Since March, commercial LPG prices have been revised three times. Businesses absorbed a Rs 144 increase in March, followed by Rs 203 in April, and now the steepest single-month hike yet. Crude oil prices remain roughly 40 per cent above where they stood before the war began.

Government Absorbing the Shock — At a Cost

The central government has so far chosen to shield ordinary households from the full brunt of the price surge, keeping domestic cylinder rates largely stable. But that protection is coming at a steep fiscal cost.

Oil marketing companies — Indian Oil, Bharat Petroleum, and Hindustan Petroleum — are collectively losing around ₹30,000 crore every month by selling fuel below market rates, according to the Petroleum Ministry. To ease that pressure, the government has cut excise duty, a concession that is costing the exchequer an additional Rs 14,000 crore per month.

Joint Secretary Sujata Sharma, speaking at an inter-ministerial briefing, was direct about the strain, saying the companies are procuring expensive raw material from global markets but selling domestically at protected prices. She assured, however, that LPG supply across the country remains adequate, with no shortage reported at any distributor.

The pressure is already showing up on dining tables. A Crisil Intelligence report tracking home-cooked meal costs found that both vegetarian and non-vegetarian thali prices climbed two per cent year-on-year in April. LPG and vegetable oil both up seven per cent annually, were the primary drivers behind the increase.

Economists are watching the situation closely. A Reuters survey indicated that India's retail inflation likely nudged closer to the Reserve Bank of India's four per cent medium-term target in April, partly on account of higher fuel costs. While inflation has stayed within the RBI's comfort zone for over a year, the sustained elevation in crude prices poses a genuine risk to that trend, particularly for a country that depends heavily on imported energy.

In the national capital, a domestic 14.2-kg cylinder costs ₹913, while the commercial equivalent stands at ₹3,071.50. Mumbai sits marginally lower at ₹912.50 for households and ₹3,024 for commercial users. Patna remains among the most expensive cities for cooking gas, with the domestic cylinder priced at ₹1,002.50 and commercial at ₹3,346.50.

For now, households have been spared the worst. But with global energy markets still hostage to geopolitical uncertainty, that buffer may not hold indefinitely.