Indian Oil Co. has hiked the price of liquefied petroleum gas for local industrial users and the price of jet fuel, but only for foreign airlines, Reuters has reported, citing a company statement. LPG prices for household consumers were kept unchanged.
For industrial consumers, however, LPG will be 47.8% more expensive, reflecting the squeeze in supply resulting from the war in the Middle East. Meanwhile, foreign airlines buying Indian jet fuel will need to pay $76.55 more per kilolitre, for a total price of $1,511.86 per kilolitre.
Some 60% of Indian households rely on liquefied petroleum gas as their primary cooking fuel, and the blockage at the Strait of Hormuz, where 90% of all Indian LPG imports pass through, has been immediately felt by consumers.
The disruption has caused soaring prices and, as a consequence, demand destruction. The government, meanwhile, has tried to tackle the crisis by redirecting LPG supply from industrial users to household consumers to ensure the availability of cooking fuel. Indian authorities are also pushing for an expansion of city pipeline gas networks to replace LPG cylinders and use them where possible.
Meanwhile, the government has pushed local refiners to boost their own production of liquefied petroleum gas, even though that product is currently loss-making due to the surge in international oil and gas prices. India’s production of LPG since February 28th has gone up by 25% to 46,000 tons per day. Local output is on course to rise further to 50,000 tons daily after Nayara Energy’s refinery restarts after seasonal maintenance this month.
In jet fuel, the crisis is also severe, with global shipments dropping to a record low of just 2.3 million tons, prompting flight cancellations and a rush to secure whatever supply is available. The situation is especially harsh for continental Europe and the UK, with CNBC reporting this week that bidding wars were breaking out in the airline industry to snatch available supply.
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com
- Tankers Move from Fuel to Crude Trade as War Upends Flows
- JP Morgan: UAE Could Attract More U.S. Investment After OPEC Exit
- ENEOS Takes 10% Stake in Malaysia LNG Tiga in New Deal With Petronas
