Global LPG Crisis: Indian Households Secure Cooking Gas at World's Lowest Prices Despite Geopolitical Turmoil

Global LPG Crisis: Indian Households Secure Cooking Gas at World's Lowest Prices Despite Geopolitical Turmoil​

India continues to maintain cooking gas prices among the lowest globally, even as international energy costs soar following geopolitical disruptions. Domestic consumers are insulated from extreme volatility, thanks to targeted government support and strategic supply management, ensuring a steady flow of essential fuel despite global market stresses.

Domestic Gas Pricing vs International Markets​

The price stability for Indian households stands in stark contrast to rising global commodity prices. While the cost of supplying an LPG cylinder has surpassed ₹1,600 following recent international benchmark increases, domestic consumers are not bearing this burden. The general consumer pays ₹942 per 14.2 kg cylinder.

For beneficiaries under the Pradhan Mantri Ujjwala Yojana (PMUY), the effective price is significantly lower at ₹642 for a 14.2 kg cylinder. This affordability reflects substantial governmental safeguards and support structures.

The difference between global costs and retail prices is evident in regional comparisons provided by market data:

The table highlights that the Ujjwala price of ₹642 is a steep discount compared to neighbouring countries and advanced economies like Canada, which commands an approximate price of ₹2,411.

Government Mechanisms Ensure Affordability​

The affordability witnessed by Indian households is maintained through two distinct protective channels: the under-recovery absorption and direct subsidies. The under-recovery refers to the gap between the international cost of the gas molecule and its regulated retail price. This burden is absorbed by public sector marketing companies and compensated partly by the exchequer.

For a domestic cylinder, there is an approximate under-recovery of ₹700 per cylinder currently absorbed by the state mechanism. Over and above this absorption, PMUY consumers receive a direct benefit transfer of ₹300 per cylinder on their first four refills each year (roughly equivalent to average annual consumption).

This cushioning system ensured that even in periods of sharp international cost increases, the burden was absorbed upstream rather than being passed directly onto the consumer. A non-PMUY household also pays substantially less, paying about ₹700 below the market-linked supply cost.

Resilience Under Global Disruptions​

A major test for India’s energy security occurred when commercial traffic through the Strait of Hormuz faced serious disruption following geopolitical events in late February 2026. About 54 per cent of India's LPG consumption was reliant on this waterway, putting the cooking gas supply at risk.

India emerged as one of the few nations to successfully navigate this crisis. Through sustained coordination and targeted measures, Indian-flagged tankers continued transiting the Strait and discharging at domestic ports, carrying crude oil and successive consignments of LPG. Consequently, there has been no shortage of any petroleum product for consumers.

To ensure continuity, supply-side initiatives included raising domestic LPG production by more than 60 per cent, increasing from about 32 TMT to around 52 TMT. Sourcing was also dramatically widened across the globe, including suppliers in the United States, Canada and Algeria, directing available gas to households and priority users like hospitals and educational institutions.

International Benchmarks and Cost Containment​

The global price movement for LPG is tied directly to international commodity benchmarks, specifically the Saudi Contract Price (CP). Before the disruption, the CP stood at about US$543 a tonne in February. Following the closure of the Strait of Hormuz in late February, the April contract price rose sharply to US$775 a tonne. The blend has since edged up further to US$790 a tonne in June.

This represents an increase of about 46% for the blended LPG benchmark from the pre-crisis February level. If the domestic cylinder were priced purely on this import-linked basis, its supply cost would have risen to over ₹1,600. The retail pricing strategy deliberately keeps this market cost separate from the consumer price.

Financial Burden and Future Oversight​

The protection provided to consumers is backed by significant financial mechanisms beyond the direct subsidy. Cumulative under-recovery on domestic LPG reached ₹60,000 crore by the end of the last financial year, up from ₹41,338 crore in the prior year. The Union Cabinet has already approved compensation amounting to ₹30,000 crore for marketing companies addressing this absorbed cost.

This multi-layered protection ensures that almost all Indian consumers have received LPG at prices far below international market levels over several years, despite extreme volatility. Consumers are encouraged to maintain utmost care in using this resource and adopt energy-efficient cooking practices.