LPG cylinder prices rise by another ₹ 29 as war in West Asia increases cost of imports | Today’s news
State-owned oil marketing companies (OMCs) have increased domestic prices of liquefied petroleum gas (LPG) cylinders by ₹29 with effect from June 7. This is the second hike since the beginning of the war in West Asia. It comes after LPG consumption in India fell to 2.13 million tonnes in May, the lowest since the covid pandemic, and almost three months after oil companies rose. LPG prices according to ₹60 roll on March 7th.
After the latest revision, a domestic LPG cylinder weighing 14.2 kg will now cost ₹942 in Delhi, ₹941.50 in Mumbai, ₹994 in Hyderabad, ₹968 in Calcutta and ₹944.50 in Bengaluru, according to industry estimates.
Read also | OMCs use tax data to tighten LPG subsidies amid energy crisis
After OMCs hiked prices, the union government said in a statement that the additional cost of supplying a 14.2 kg domestic LPG cylinder was not fully passed on to consumers and that Indian households continued to pay among the lowest cooking gas prices in the world.
Beneficiary under Pradhan Mantri Ujjwala Yojana will continue to receive direct benefit transfer of Rs ₹300 per cylinder on the first four refills every year. A typical Ujjwala household gets four refills a year and effectively pays ₹642 for these refills, according to the government.
The government said there was underutilization of every domestic LPG cylinder sold ₹700 before price increase. He said if domestic LPG prices were linked to international rates, every bottle would cost ₹1,600. Underutilization is the difference between the international price of the molecule and the domestic retail price. This difference is usually absorbed by public sector marketing companies and partly compensated by the exchequer. By the end of last financial year, the cumulative non-use of domestic LPG had reached ₹60,000 crore, more than ₹41,338 crore the previous year.
The latest price hike follows disruptions to global energy markets caused by blockade of the Strait of Hormuz, a critical trade route that provides one-fifth of the world’s oil and natural gas exports. Fuel prices around the world have been volatile since the start of the US-Iran war on February 28, with Brent crude, the global oil benchmark, trading around $100 a barrel.
Read also | The government is considering an LPG stockpile mandate as war in West Asia hits supplies
Commercial LPG prices have seen a much steeper rise in the past few months as they are directly linked to an international benchmark. There is a 19kg commercial bottle in the state capital, which is mostly used in hotels and restaurants ₹3,113.50.
LPG most affected by the war
LPG stocks were the worst hit due to the war and the Strait of Hormuz blockade as India imported 60% of its LPG before the warwith about 90% of these imports coming from West Asia. The purchase price of these imports followed the Saudi contract price (CP) set by Saudi Aramco at the beginning of each month. Saudi CP was set at $790 a tonne in June, up about 46% from pre-war levels in February. India is trying to diversify its imports, using the US, Russia and Norway, among others.
Prashant Vashisht, senior vice president and joint group head, corporate ratings, ICRA Ltd, said, “The daily under-recovery from LPG sales across the three OMCs combined would be approx. ₹300 crore, which is a major part of the total underutilization of approx ₹520 million crowns. Elevated levels of under-recovery continue due to high benchmark Saudi CP.”
OMCs have already increased the price of petrol and diesel four times in the last three weeks, taking the cumulative increase to approx ₹7.5 per liter. However, it is to be noted that the three OMCs – Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd – reported a cumulative net profit of more than ₹77,000 in FY26 amid low oil prices.
Concerns about inflation
This increase in retail prices is expected to support inflation and reduce spending, thereby impacting growth. On Friday, the Reserve Bank of India (RBI) revised its inflation forecast upwards to 5.1% for FY27 from the earlier forecast of 4.6%.
RBI Governor Sanjay Malhotra said heightened global uncertainty, potential supply chain disruptions, commodity price shocks, uncertainty around the southwest monsoon and the possibility of El Nino conditions pose risks to inflation.
NR Bhanumurthy, director of the Madras School of Economics said, “In the first round of impact, either inflation or the fiscal deficit would rise (unless the increased prices are passed on to consumers and absorbed by the government). However, in the second round of impact, inflation will necessarily rise because the widening of the fiscal deficit would itself lead to higher inflation. So OMChi will only have to pass on price rises to global inflation, but ultimately it will have to pass on its inflation. The impact will be felt.”
LPG consumption fell to multi-year lows in May as the government introduced measures to manage demand. The government has mandated a period of 45 days for domestic LPG reservation in rural areas and 25 days in urban areas to manage demand. Domestic production of LPG has also increased, with most of it being diverted for household consumption.
Read also | Mint Quick Edit | Commercial LPG price hike: It’s not as harmless as it seems
Data from the Petroleum Planning and Analysis Cell showed that total LPG sales in India stood at 2.13 million tonnes, down 4% from the 2.21 million tonnes consumed in April and 19% lower than ₹2.68 million tons used in May 2025. Consumption in May was the lowest since 2.10 million tons used in April 2021, amid the second wave of the pandemic.
