Global crude oil prices surged by over 50% during the Iran war, according to a Business Today report, as supply routes through the Strait of Hormuz came under threat. Yet India did not witness fuel rationing, unlike several neighbouring countries, because its three state-run oil marketing companies (OMCs) — Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) — absorbed the price shock and reconfigured operations to maintain uninterrupted supplies.
Middle East Conflict Tests India's Fuel Security
The conflict in the Middle East disrupted crude supply routes and raised concerns over shipments through the Strait of Hormuz, the article reported. In response, IOC, BPCL, and HPCL quickly reconfigured refinery operations. They increased LPG production by diverting refinery streams away from petrochemicals, diversified crude sourcing, optimised refinery runs based on available feedstock, and coordinated fuel supplies across the country to prevent local shortages.
"The result was that no corner of the country went without fuel. Unlike several countries, including those in the neighbourhood, India did not see any rationing of fuel," an industry official told PTI, as quoted by Business Today.
The companies also relied on India's strategic petroleum reserves and commercial inventories, working closely with the government to reassure markets that adequate supplies would continue.
Strategic Role of State-Run OMCs in Earlier Crises
The same network proved critical during previous national emergencies, according to the report. When unprecedented floods submerged Chennai in 2015, IOC, BPCL, and HPCL rerouted fuel supplies, restored flooded depots, and ensured uninterrupted supplies to emergency services. During the Covid-19 pandemic, fuel stations stayed operational, refineries functioned with skeletal staff, LPG cylinders reached millions of households, and aviation fuel supplies were maintained for relief and medical flights. Engineers remained stationed inside refineries for weeks, while tanker drivers and LPG delivery personnel continued operations through curfews and containment zones.
Shielding Consumers from Global Oil Price Shocks
For more than two-and-a-half months, the three OMCs absorbed an over 50% increase in international oil prices before raising petrol and diesel prices by Rs 7.50 per litre each, LPG prices by Rs 89 per cylinder, and CNG prices by Rs 6 per kg. These increases were significantly lower than those seen in many major economies, the article noted. Even as they awaited full government compensation for subsidised cooking gas during 2025-26, they kept petrol and diesel prices unchanged through more than three months of turmoil, sacrificing earnings to cushion consumers.
| Fuel Product | Price Increase (Indian Rupees) | Global Crude Increase |
|---|---|---|
| Petrol | Rs 7.50 per litre | Over 50% |
| Diesel | Rs 7.50 per litre | Over 50% |
| LPG | Rs 89 per cylinder | Over 50% |
| CNG | Rs 6 per kg | Over 50% |
According to Crisil Ratings, the three public-sector fuel retailers are estimated to have incurred net under-recoveries of Rs 40,000–45,000 crore between March and May, after accounting for inventory gains — almost equivalent to their combined annual profits.
Privatisation Attempts and National Security
Despite long-standing criticism over government intervention in fuel pricing, modest returns, and operational inefficiencies, every national emergency has strengthened the case for retaining government control, analysts and industry officials said. BPCL and HPCL were put up for privatisation twice — first in 2002 before the process was halted by a Supreme Court ruling, and again in 2020, when the proposed sale was abandoned after failing to attract enough bidders. The report concluded that the strategic value of these companies in ensuring energy security during crises has repeatedly outweighed the push for privatisation.
For commodity traders and analysts, the episode underscores that India's state-run OMCs will remain the primary shock absorbers in global oil market disruptions, prioritising domestic supply stability over profit maximisation. Their ability to absorb prices and coordinate logistics acts as a floor under Indian demand, even as global benchmarks remain volatile.
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