New Delhi, March 7 --  Amid ongoing conflict in the Middle East, the prices of domestic LPG and commercial cylinders have been hiked by a steep Rs 60 and Rs 114.5, respectively, from Saturday.

This is the second price hike in less than a year. Government sources said the revision comes after a sharp jump in global energy prices since the military conflict between the United States and Israel against Iran began in West Asia.

Sources, however, added that an increase in petrol and diesel prices is not in the offing as state-owned oil firms have enough financial muscle to absorb the warranted increase.

Non-subsidised LPG -- the one that common households use in kitchens -- will now cost Rs 913 per 14.2-kg cylinder in Delhi as against Rs 853 previously, according to the Indian Oil Corporation (IOC) website.

Ujjwala Yojana beneficiaries -- the over 10 crore poor who have got free LPG connections since 2016 -- will also have to bear the same amount of price increase. They will now pay Rs 613 per 14.2 kg cylinder after accounting for a subsidy of Rs 300 per bottle they get for up to 12 refills in a year.

Government sources said the increase was necessitated because of a spike in global energy prices. Despite the increase, the price is less than the Rs 1,050 per 14.2-kg cylinder rate required to breakeven at cost.

They said considering an average consumption of 4-5 cylinders per year per household, the increase translates to 80 paisa per day for a family of four or just 20 paisa per person. Even at the increased prices, LPG in India is cheaper than most countries in the world, they said adding cooking costs Rs 1,207 per bottle in Katmandhu, Rs 1,241 in Sri Lanka and Rs 1,046 in Pakistan.

Sources ruled out any immediate increase in petrol and diesel price as three fuel marketing companies - Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) with bumper profits in earlier this year - had enough financial muscle to absorb such impact.

Retail petrol and diesel prices have been on a freeze since April 2022, with fuel retailers absorbing losses when crude prices are high and making profits when rates are low.

Alongside, the price of commercial LPG - the one used by establishments such as hotels and restaurants - was increased by Rs 114.5 per 19-kg cylinder.

It now costs Rs 1,883 in Delhi. This increase comes on top of Rs 28 per 19-kg cylinder raise effected on March 1. Commercial LPG rate has risen by Rs 302.50 this year.

Since the conflict broke out on February 28, the US crude soared 35.63 per cent for the biggest weekly gain in the history of futures contract dating back to 1983.

LPG markets have also tightened as shipments from key Gulf exporters face logistical disruptions, pushing international propane and butane benchmarks higher and raising concerns over supply availability for major importers such as India.

In Mumbai, non-subsidised LPG now costs Rs 912.50, Rs 939 in Kolkata, and Rs 928.50 in Chennai, according to the IOC website. Rates differ from state to state depending on the incidence of local sales tax or VAT.

The Strait of Hormuz is also a critical conduit for India's energy imports, with roughly half of the crude oil the country buys from overseas transiting through the narrow waterway. In addition, nearly 40 per cent of India's natural gas imports, largely in the form of LNG from Gulf suppliers like Qatar and the UAE, also pass through the strait.

Published by HT Digital Content Services with permission from Millennium Post.