Kitchen Budgets Hit: Why Gas Prices are Surging Amid the Iran-Israel War

Following the escalation of the Iran-Israel-US conflict that began on February 28, 2026, Indian households are facing a sharp increase in energy costs. On March 7, 2026, oil marketing companies (OMCs) implemented a steep hike in the price of Liquefied Petroleum Gas (LPG), marking a significant shift after nearly a year of price stability.

The Numbers: What Has Changed?

The price revision has impacted both domestic and commercial consumers across the country:

Note: Prices for the 100 million+ Ujjwala Yojana beneficiaries remain shielded due to ongoing government subsidies.

3 Reasons Why Prices Are Rising

The surge is not merely a local decision but a reaction to a “systemic shock” in the global energy market.

1. The “Strait of Hormuz” Chokepoint

Approximately 20% of global oil and a staggering 60% of India’s LNG (Liquefied Natural Gas) imports pass through the Strait of Hormuz. With Iran threatening to close this narrow waterway in response to US-Israel strikes, tanker traffic has virtually halted. This disruption has sent spot prices for gas soaring as global supply chains tighten.

2. Import Dependency & Crude Spikes

India imports over 88% of its crude oil and nearly half of its LPG requirements. Since the conflict began:

• Brent Crude jumped from roughly $70 to over $100 per barrel, briefly touching $120.
  
• Saudi Aramco’s Contract Prices, which serve as the benchmark for LPG in Asia, have reflected extreme volatility, forcing Indian OMCs to pass costs to consumers after months of absorbing losses.

3. Emergency Diverts & Production Costs

To prevent a total shortage, the Indian government has invoked emergency powers under the Essential Commodities Act, directing refineries to prioritize domestic LPG production over petrochemicals. While this ensures the “lights stay on,” the logistical shift and higher insurance premiums for shipping through war zones have added layers of cost to every cylinder.

What About Petrol and Diesel?

While cooking gas has seen an immediate hike, the government has so far frozen petrol and diesel prices.

“Energy stock position is improving… we assure that prices of Petrol and Diesel will not increase,” — Government Sources (March 7, 2026).

The government is currently utilizing its 7–8 week fuel buffer and a 30-day US waiver on Russian oil to keep transport fuel stable, though experts warn that a prolonged war could eventually force a revision there too.