Is India Facing Fuel Rationing? Oil Ministry Clears the Air Amid Global Disruptions

No Fuel Rationing in India, Assures Oil Secretary

New Delhi: A senior official from India's oil ministry stated on Monday that the country will not implement fuel rationing, despite the ongoing turmoil in global energy markets. The official emphasized that India has sufficient reserves of crude oil and LPG, and has diversified its import sources to mitigate supply risks.

Oil Secretary Neeraj Mittal reassured attendees at the CII Annual Business Summit that there is no cause for alarm. He highlighted that India has maintained approximately 60 days' worth of fuel stocks and around 45 days of LPG supplies during the last 67 days of market instability.

These remarks followed Prime Minister Narendra Modi's recent call for fuel conservation and reduced imports, as rising global energy prices are straining India's foreign exchange reserves. Modi also urged citizens to limit gold purchases to alleviate external vulnerabilities.

Some observers interpreted this as a precursor to a potential increase in fuel prices.

Despite international prices soaring due to the conflict in West Asia over the past ten weeks, petrol and diesel prices in India have remained unchanged for two years. This price stability, in light of a more than 50% increase in input costs, has resulted in oil companies incurring losses between Rs 1,000 crore and Rs 1,200 crore, jeopardizing their financial health.

A government source indicated that the administration's default strategy is to maintain stable prices and supplies.

Mittal noted that the government has secured additional energy shipments, increased procurement from current suppliers, and mitigated some of the price impacts through fiscal measures, including cuts in excise duties on petrol and diesel.

As the third-largest oil importer and consumer globally, India is also intensifying its efforts to boost domestic exploration, establish strategic reserves, and develop alternative energy initiatives such as green hydrogen, ethanol blending, and sustainable aviation fuel.

Mittal explained that for a nation like India, which consumes 5 million barrels of oil daily, maintaining a 90-day reserve would be impractical, tying up significant capital without immediate use. He mentioned that the government is looking into innovative methods to enhance strategic reserves while ensuring returns on stored crude.

He further elaborated that the government has been managing supply disruptions caused by geopolitical conflicts and limitations in global energy shipments for the past 67 days.

Mittal acknowledged that the situation has not improved and may have worsened slightly, but India successfully navigated the crisis, managing to send 14 ships through the conflict-ridden Strait of Hormuz.

Throughout the crisis, India has sustained around 60 days of fuel stocks and approximately 45 days of LPG inventories.

The official stated that India has sourced supplies from various countries and increased procurement from existing suppliers, which has helped maintain supply stability in the short term.

India's extensive refining capacity has also played a crucial role in cushioning the effects of supply shocks, enabling the country to meet domestic demand while continuing to export refined petroleum products.

The government has implemented targeted demand-management strategies, prioritizing LPG supplies for household cooking and allowing 70% of industrial LPG supply following industry requests for eased restrictions.

Mittal mentioned that nearly 100% digital tracking of LPG cylinder deliveries has significantly curtailed diversion and black-market sales.

He reiterated, "There is no need to panic. There are sufficient supplies. There is no rationing in place. It’s not going to happen."

Regarding strategic reserves, Mittal stated that India is assessing innovative approaches to expand stockpiles without immobilizing excessive capital, given the country's daily oil consumption of about 5 million barrels.

He added that the government is exploring commercial partnerships and trading models to ensure that strategic crude inventories can also yield returns.

Mittal concluded by noting that the government has absorbed much of the price shock through fiscal measures, including excise duty reductions on petrol and diesel, which have resulted in a revenue impact of approximately Rs 1.6 lakh crore.

He remarked that India has remained "a relative oasis of calm" compared to other nations that have imposed fuel rationing and stricter demand restrictions.