India Acts to Secure Domestic Fuel Supply as Middle East Conflict Escalates
In response to growing concerns over potential crude oil shortages, the Indian government is actively encouraging refiners to prioritize the domestic market. This strategic move involves reducing exports of auto fuel and liquefied petroleum gas (LPG) while simultaneously ramping up cooking gas production. The goal is to ensure uninterrupted local supplies amidst escalating tensions in West Asia, which threaten to disrupt global energy flows.
Government and Industry Response to Supply Fears
While both government officials and oil companies have publicly insisted that there is no immediate shortage, refiners are proactively seeking alternative crude sources. This effort aims to partially offset the potential loss of supplies from conflict-affected regions in West Asia. The situation has already triggered a spike in global oil and gas prices, exacerbating India's import dependency and fueling inflationary pressures across the economy.
Officials have indicated that retail fuel prices may not see an immediate increase. This is due to a calibrated approach adopted by oil marketing companies, which involves absorbing losses during periods of high global prices and recouping them when prices stabilize. Notably, retail petrol and diesel prices have remained unchanged since April 2022, reflecting this managed strategy.
High-Level Meetings and Monitoring Efforts
On Monday, Petroleum Minister Hardeep Singh Puri and his team convened a crucial meeting with oil company executives to assess the availability of crude and gas. This discussion occurred against a backdrop of significant developments, including Iranian drone attacks damaging part of a Saudi Aramco refinery and Qatar Energy, the world's largest LNG producer, announcing a temporary export pause.
The oil ministry emphasized its vigilance in a post on X, stating, "We are continuously monitoring the evolving situation, and all steps will be taken to ensure availability and affordability of major petroleum products in the country." India's energy security is particularly vulnerable, as it imports approximately 90% of its crude oil requirements. Additionally, the country relies on imports for 60-65% of its LPG demand and about 60% of its LNG needs, with a significant portion sourced from West Asia and shipped via the Strait of Hormuz—a critical chokepoint now at risk due to the ongoing conflict.
Export Dynamics and Strategic Adjustments
According to the International Energy Agency, India exported 5.9% of its petroleum production in 2023. Between April and December 2025, the country exported petroleum products worth nearly $330 billion, with key destinations including the Netherlands, UAE, the US, Singapore, Australia, and China. In 2024, India also exported petroleum gas valued at $454 million, primarily to Nepal, China, and Myanmar. The Reliance refinery in Jamnagar stands as the nation's largest exporter.
An oil company executive revealed that refiners are already engaging with traders to secure capacities amid fears of a blockade in the Strait of Hormuz. By Monday, global markets had reacted nervously to Qatar's decision to suspend gas shipments, highlighting the interconnected nature of energy supply chains.
Contingency Plans and Future Outlook
Another executive noted that while disruptions could pose short-term challenges, Indian players maintain a diversified portfolio for LNG, including supplies from the US, with vessels routed through the Suez Canal. "Even if there is a force majeure, we have other sources of supply, which we can tap. Besides, no one is going to stop supplies indefinitely," the executive assured. The primary focus remains on keeping supply lines open, even as oil and gas prices experienced upward pressure on Monday.
This proactive stance underscores India's commitment to mitigating risks and safeguarding its energy security in a volatile global landscape.
