Centre asks oil firms to build 30-day LPG strategic reserves amid West Asia tensions

The Centre has directed state-run oil marketing companies to expand storage and hold strategic reserves of liquefied petroleum gas (LPG) sufficient for at least 30 days of demand. The instruction comes amid worries over supply disruptions caused by the ongoing conflict in West Asia and was confirmed by Sujata Sharma, Joint Secretary in the Ministry of Petroleum and Natural Gas, on 29 May 2026.

Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) have been asked to prepare detailed plans for additional LPG storage capacity beyond their normal commercial inventories. The government has also said it is working on expanding crude oil storage capacity, though further details were not shared.

India's import exposure to the Gulf is heavy. Around 40 per cent of India's crude oil imports, 65 per cent of natural gas supplies and 90 per cent of LPG imports come from Gulf countries. The three-month-long conflict in West Asia has disturbed global energy supply chains and put particular pressure on LPG shipments, even though alternative sources have been found for crude and natural gas.

To manage current LPG flows, the government has tightened supplies to commercial consumers while protecting domestic cooking gas users. LPG production at Indian refineries has reached an all-time high of about 52,000 tonnes a day, and no LPG distributor has reported a dry out so far.

Fuel demand has spiked sharply. Petrol sales have risen more than 30 per cent year-on-year in over 150 districts and have more than doubled in 14 districts. Diesel sales are up more than 30 per cent in 156 districts and have grown over 100 per cent in six districts. The surge is being driven partly by agricultural demand and partly by buyers shifting from private fuel retailers to state-run pumps because of pricing differences.

Bulk diesel sales by public sector oil companies are down 29 per cent, and overall sales by private retailers are down 38 per cent for diesel. Public sector outlets continue to sell petrol and diesel below cost in retail, while charging market-linked rates to bulk consumers such as telecom tower companies. Since 15 May 2026, IOC, BPCL and HPCL have raised retail petrol and diesel prices by around Rs 7.50 per litre.

The Centre has asked states and Union Territories to set up special enforcement squads to prevent hoarding and black marketing. Consumers have been told not to panic buy and to use only authorised channels.

For exam aspirants, this is a textbook case of strategic energy planning. India already has the Strategic Petroleum Reserves (SPR) at Visakhapatnam, Mangaluru and Padur for crude oil. A formal 30-day LPG reserve, when set up, would extend the strategic reserve model to cooking gas and reduce the impact of overseas supply shocks on Indian households.