India is trying to ease worries about having enough fuel, even though the fighting in the Middle East is making the world’s energy markets unstable. People in the government say there aren’t any plans to ration gasoline or diesel, and the country has a lot of fuel on hand now. They also say that there are plans to protect the most important industries and to keep fuel moving if things get worse.
Authorities say that the fuel the country has is a good protection against problems in the short term. India has about eight weeks of crude oil and petroleum products – including what is in emergency storage – which is around 25 days of crude oil, and around 25 days of gasoline and diesel that is already in the system. Officials say that the energy situation is looked at twice a day, and fuel is being added to storage without stopping. They also say that right now, there isn’t a shortage of LPG, LNG, or crude oil in the world. India is in contact with many suppliers all the time to be sure fuel keeps coming in, and to keep transport working well.
Gas Authority of India Limited might use “force majeure” – a legal step used when events people can’t expect make it hard to keep a contract – on some gas supplies, to keep the most important industries supplied. This step protects the people involved from penalties when there are problems, and keeps the order of who gets fuel first in place. Qatar Energy has already done the same thing. Qatar is very important in the world trade of gas, providing about 20 percent of the world’s LNG. It is also a key partner for India, delivering about 60 million cubic meters of gas a day out of India’s 195 million cubic meters of LNG imports.
Making sure this gas continues to flow is very important to power stations, fertilizer plants, and gas networks in cities.
India is finding other places to get fuel. People in the government say Australia and Canada have offered to send more gas, as New Delhi looks for fuel that can be bought and sold easily. The country is also talking to major oil producers and traders to get crude oil and LPG at good prices. Officials say they are still working with the International Energy Agency and OPEC members to follow supply and prices. Talks with the United States include the possibility of insurance for ships carrying fuel, which would be a good backup if the cost of insuring ships against war goes up. Recent agreements with the UAE and the US are meant to make the country’s fuel supplies more varied, and to lower the risk of depending on too few sources. At the same time, India is still importing Russian crude oil under existing contracts. Having a wide variety of suppliers from many places makes the country stronger, and lets companies that refine oil have more ways to choose what oil to use, and to get the most out of it.
Only about 40 percent of the crude oil India imports goes through the Strait of Hormuz, a key shipping route that could be affected by the fighting. The other 60 percent comes through other routes and from other suppliers, which lowers the risk of problems if shipping is stopped in that area. Even so, the cost of shipping, insurance, and how long it takes to get to port can change quickly when there is geopolitical risk. Officials say they are following how many tankers are available, insurance costs, and how long it takes to load and unload ships, to keep import schedules on track and to lower any extra costs that could affect prices at the pump.
Whether fuel prices in India will go up depends on a number of things.
One is world prices for crude oil, and how much refineries can make from gasoline and diesel. If Brent crude and middle-distillate margins go up and stay high, the costs for refineries to get the oil they need will also go up. Another is the exchange rate between the rupee and the dollar, which directly affects how much imports cost. Also important are the profits made by state-run oil companies. When world prices go up faster than prices at the pump, these companies can lose money, which might lead to a review. Policymakers also have ways to use taxes to help consumers, or to rebuild company profits. Any decision usually balances keeping inflation under control, government finances, and the stability of the market. LNG and LPG prices matter for power, industry, and homes, but only affect gasoline and diesel in an indirect way. The best protection in the short term comes from storage and getting fuel from many places. With enough fuel to last eight weeks, and fuel being added to storage all the time, officials expect fuel to keep flowing. But if world prices stay high, or shipping is stopped, that could eventually lower profits and make prices at the pump go up.
What consumers and businesses should expect: For now, the government is signaling that things are stable – there will be no rationing of gasoline or diesel, and the country has good fuel supplies. Consumers should expect fuel to be available as usual, and to follow normal seasonal patterns. Any changes to prices at the pump, if needed, will likely be small and gradual, depending on world prices and currency movements. Businesses that use a lot of fuel should follow the margins for diesel, shipping costs, and exchange rates. Companies that move goods, logistics firms, and small and medium-sized businesses might benefit from short-term ways to be more efficient, to find the best routes, and – where possible – to use basic ways to protect against price changes.
India’s energy policy is a mix of being careful and being flexible.
Daily reviews, getting crude oil and gas from many sources, the possibility of using “force majeure” to protect important industries, and working with the IEA, OPEC, and the US on shipping insurance all show that India is taking a proactive approach. The fighting in the Middle East is clearly a risk to world energy stability. But India’s limited use of the Strait of Hormuz, continuing to import Russian crude oil, agreements with the UAE and the US, and offers from Australia and Canada all help to keep fuel supplies secure. If world prices stay unstable, pricing at the pump will be a policy decision shaped by inflation, profits, and how much the government can spend. For now, the message is clear: supplies are secure, and rationing is not being planned.
