People stock up LPG cylinders at Kavadiguda in Hyderabad on March 12, 2026, following the shortage in supplies.
| Photo Credit: RAMAKRISHNA G
This week’s news cycle delivered a striking contrast for India. On one hand, headlines celebrated the national men’s cricket team’s T20 World Cup victory; and on the other, reports documented sharp escalations in global energy prices. The juxtaposition served as a reminder of how sports can unite nations – and how geopolitical tensions between countries can produce significant ripple effects globally making millions suffer.
The most recent crises including COVID-19 and the Russia-Ukraine conflict, have put considerable stress on global energy markets. Escalating tensions between U.S. and Iran drove, India’s Brent crude price up by 50% in less than a week, rising from $80 per barrel on 2 March to $120 per barrel on 9 March. On the same day, equity markets recorded a broad-based sell-off driven by fears over increased energy prices and fuel supply, which affect all segments of the economy to varying degrees.
India imports a large proportion of its crude oil, liquefied petroleum gas (LPG), and natural gas in the form of liquefied natural gas (LNG). Geopolitical disruptions to fuel supply and prices therefore impose significant fiscal and economic strain on the country. The impact is already evident: a ₹60 increase in the LPG cylinder price represents a 7% increase in household cooking fuel spending. India’s crude basket has jumped to $120 per barrel – an increase that will affect petrol and diesel prices, as well as domestic gas prices, which are linked to 10% of the Indian crude basket.
The crisis exposes India to several compounding risks. Higher fuel prices transmit inflationary and macro-economic pressures through increased cost of transport, manufacturing, fertilizer and food production. Supply disruptions may be prolonged, given the closure of a key supply route that accounts for over 50% of LNG imports and 90% of LPG import needs. Even after the Strait of Hormuz reopens, a substantial lag in supply resumption is likely. The rupee depreciated 5% against the U.S. dollar in 2025 from approximately ₹85 in January 2025 and has further weakened to a record low of ₹92.34 against the dollar due to the rising crude prices – compounding inflationary pressures and raising India’s cost of borrowing.
The government has repeatedly noted that srategic reserves remain sufficient for at least 25 days of crude oil and LPG, and 10 days for LNG. It has, however, invoked the Essential Commodities Act, 1955 to regulate the supply of LPG and natural gas. Under these provisions, the LPG supply has been prioritised for residential use, while natural gas has been allocated first to residential piped networks and compressed natural gas for transport, followed by fertilizer production, industry, and refineries. These supply-side constraints risk demand destruction across multiple sectors. Commercial kitchens and food outlets struggling to secure LPG, for example, may begin exploring longer-term alternatives such as electric cooking.
No clear signals of increased supply from other producing nations have emerged. G7 nations have agreed to take necessary measures to support energy supply during the crisis but have not provided details on the release of strategic crude reserves. Some easing maybe witnessed by the International Energy Agency (IEA) agreeing to release 400 million barrels of oil from emergency reserves.
The Russia-Ukraine conflict reshaped global energy markets – most notably accelerating Europe’s shift from piped gas to LNG and prompting changes among suppliers and consumers alike. The current U.S.-Iran tensions raise a different but equally pressing question: control over energy sources, and the case for energy independence potentially through renewable energy deployment and electrification, especially for India.
China better positioned
China, for instance, appears comparatively better positioned to manage this crisis. Rapid electrification across key sectors – particularly transport and power – has reduced the country’s exposure to fuel supply disruptions. China has also built robust renewable energy supply chains and critical mineral stockpiles. According to estimates, China’s push for electric vehicles, especially trucks, has already displaced over one million barrels of implied per day oil demand.
An opportunity
India must take this crisis as an opportunity to build on progress already made in renewable energy deployment, greening of the grid, and introduction of new technologies such as battery storage. Much as success in cricket demands both flexibility and long-term preparation, India’s energy strategy requires the same combination. The immediate priorities are clear: diversifying fuel supply sources, enhancing strategic reserves, and, above all, accelerating the clean energy transition. These actions will equip India to navigate a volatile and ever-changing global energy landscape with greater resilience.
(Vibhuti Garg is Director, South Asia, Institute for Energy Economics and Financial Analysis (IEEFA) and Purva Jain is Lead Energy Specialist, Gas & International Advocacy, South Asia Institute for Energy Economics and Financial Analysis (IEEFA))
Published – March 13, 2026 11:16 am IST
