Indian refineries raise liquefied petroleum gas prices for the first time in a year, impact of Iran conflict becomes evident

Investing.com — On Saturday, India’s state-owned refiner raised domestic cooking gas prices for the first time in nearly a year, citing escalating Middle East conflicts that have disrupted energy transportation through the Strait of Hormuz. This move highlights the growing economic impact of regional wars on the world’s third-largest liquefied petroleum gas (LPG) consumer.

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India’s largest refiner, Indian Oil Corporation (NSE:IOC), increased the price of 14.2 kg liquefied petroleum gas cylinders in the New Delhi area by 7% to 913 rupees ($9.95). Bharat Petroleum (NSE:BPCL) and Hindustan Petroleum (NSE:HPCL) also implemented similar price hikes, marking the first increase in household gas prices since April 2025.

Hormuz Crisis Threatens 90% of Imports

The price surge is directly due to the de facto closure of the Strait of Hormuz. India heavily relies on this maritime route, with over 90% of its LPG imports coming from Middle Eastern suppliers. As global fuel costs rise and freight is limited, the government has been forced to pass some of the costs onto consumers.

Approximately 222 million households (about two-thirds of India’s LPG-using population) will be affected by the price increase. The remaining consumers continue to benefit from government subsidies. Due to ongoing “supply chain risks,” the government has invoked emergency powers, requiring refineries to prioritize supplies to households over petrochemical plants.

Political Sensitivity and Inflation Pressures

LPG pricing is a sensitive issue in Indian politics. Since women make up nearly half of the electorate, the government usually avoids raising cooking gas prices. However, the severity of the current energy shock appears to leave policymakers with little choice.

Commercial gas prices have also been adjusted, with cylinders used by hotels and restaurants increasing by 6.5% to 1,883 rupees. This is the second adjustment since a modest 1.6% increase on March 1, reflecting a more frequent monthly pricing revision mechanism in the commercial sector. Investors are watching whether the government will increase subsidy budgets to protect the most vulnerable or allow further market-driven price hikes.

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