Middle East Crude Oil Crisis: Petrol, diesel, LPG, ATF consumers in India need not worry?

Strait of Hormuz Energy Supply Disruption: Is there any shortage of oil and gas supplies in India owing to the Middle East crisis? According to petroleum ministry sources, retail prices of petrol, diesel, aviation turbine fuel (ATF), LPG and LNG are set to remain stable for now, given the availability of adequate domestic supplies or incoming consignments in the pipeline. In other words, the end-consumer may not have yet to worry about sharp hikes in these fossil fuels owing to disruptions in the Strait of Hormuz -- a crucial waterway that 20 per cent of the world's oil and gas supply passes through.

The statement by official sources comes at a time when crude oil prices have surged to their highest intraday levels recorded since June 2022. Supply cuts by major producers and fears of a longer period of shipping disruptions than earlier anticipated continue to underpin energy prices. The ongoing disruptions in the Strait of Hormuz come at a time when a conflict in the Middle East is now in a second week, after joint US-Israel strikes against Tehran killed Iran's Supreme Leader and triggered Iran's retaliatory action against several countries in the region.

Add Zee Business as a Preferred Source

Much of Iraq's crude output from its main oilfields has been impacted owing to disruptions in the Strait of Hormuz, according to foreign media reports. The waterway is one of the world's key oil transit chokepoints.

Here's what the petroleum ministry sources say:

• There is no shortage of petrol and diesel in the country
• Adequate stocks of petrol, diesel and LPG
• No change expected in retail prices of petrol, diesel and LNG for domestic consumers
• Crude prices may hover around $100 a barrel for some time
• Even if crude price remains around $130 per barrel for a prolonged time, the likelihood of a price increase in the domestic market is low
• The impact of the closure of the Strait of Hormuz is being witnessed for the first time
• Now, less than three ships are passing through the Strait of Hormuz daily, sharply lower from around 138 ships earlier
• Industrial supply has been diverted
• No rationalisation of supply for domestic consumption
• OMCs instructed to increase LPG production
• 10 per cent of LPG is coming from the USA
• Supplies from Canada, Australia, Norway, Algeria and several other countries are expected to arrive soon
• No issue with stock under the current situation
• The decision to increase the delivery cycle from 21 days to 25 days is aimed at preventing black marketing and hoarding
• No shortage of aviation turbine fuel (ATF) -- or jet fuel
• ATF stock is adequate
• India is an exporter of aviation fuel
• There is currently no intention to stop exports
• No proposal at present to introduce any new duty
• A decision will be taken based on how the situation evolves
• There is no plan to reduce duties for domestic prices

However, a restaurants' body claimed that suppliers are facing difficulty in meeting their delivery obligations.

"As per news articles, the Government has clarified that there is no ban on supply of commercial LPG cylinders for the restaurant industry. However, the ground situation is different, with suppliers expressing inability to supply the same... This is severely impacting the restaurant industry and in turn supply of food as an essential service for citizens. We request urgent clarification/intervention," the National Restaurant Association of India (NRAI) wrote on X (formerly Twitter).

The National Restaurant Association of India (NRAI) is the leading association for the Restaurant Industry since 1982.

Here are answers to frequently asked questions (FAQs) on the subject:

Why are crude oil prices rising globally?

Prices have surged amid supply cuts by major producers and fears of prolonged shipping disruptions, linked to the escalating conflict in the Middle East.

Is there any shortage of petrol or diesel in India right now?

According to petroleum ministry sources, there is currently no shortage of petrol or diesel in the country. Adequate stocks are available to meet domestic demand, they said.

Will petrol and diesel prices rise immediately?

No immediate increase is expected, according to sources.

Are LPG and LNG supplies also stable?

Yes. Sources say adequate stocks of LPG are available, and LNG prices for domestic consumers are also expected to remain stable for now.

Why is the Strait of Hormuz disruption significant?

The Strait of Hormuz is one of the world’s most critical energy routes. Roughly 20 per cent of global oil and gas supply passes through this waterway.

Could crude oil prices stay elevated?

Yes. Most analysts expect a prolonged period of elevated crude oil rates than earlier anticipated.

What is India's tolerance level in terms of crude oil rates?

Even if crude prices remain around $130 per barrel for an extended period, sources say, the likelihood of an immediate retail price hike in India remains low.

Has domestic fuel supply been rationed?

No.

Is there any shortage of jet fuel?

No. Sources say ATF stocks are adequate.

Will India stop exporting jet fuel?

There is no current plan to stop ATF exports, according to sources.