Delhi CNG Prices Jump Nearly 8% as West Asia Crisis Drives Up Global LNG Costs

Compressed natural gas got noticeably more expensive in Delhi-NCR from Saturday morning, as city gas distributor Indraprastha Gas Limited (IGL) raised retail CNG prices by Rs 3.89 per kg, citing a sharp and sustained rise in international LNG costs.

The revised rate, effective from 6 am on August 29, pushes Delhi's CNG price up from roughly Rs 77 per kg to about Rs 83 per kg — an increase of nearly 8%, among the steepest single revisions IGL has made in recent memory. The company said the hike was necessary because elevated global LNG prices have meaningfully raised its input gas costs, and it could no longer fully absorb the difference.

Why LNG prices are surging

The underlying driver is the escalating conflict in West Asia, which has disrupted the movement of LNG and crude cargoes through the Strait of Hormuz, a chokepoint that under normal conditions carries roughly a fifth of the world's traded petroleum and a significant share of global LNG shipments. With tankers rerouting or facing delays, spot LNG prices in international markets have nearly doubled in recent weeks.

Compounding the pressure is seasonal demand from Europe, which is beginning to stock up on gas ahead of the northern hemisphere winter, adding further competition for the same limited cargoes that would otherwise flow toward Asian buyers, including India.

What it means for Delhi commuters

CNG is the default fuel for a large share of Delhi's public transport fleet, including auto-rickshaws, taxis and buses, as well as a growing number of private cars, making any price revision immediately visible to daily commuters. IGL, however, has emphasised that despite the latest hike, Delhi continues to have one of the lowest retail CNG prices among gas-importing nations globally, arguing that the company has absorbed a disproportionate share of the international cost increase rather than passing it through in full.

Industry watchers note that this is the tension city gas distributors are currently navigating: input costs tied to volatile international benchmarks are rising quickly, while retail pricing decisions carry political and affordability sensitivities, particularly for a fuel marketed as the cheaper, cleaner alternative to petrol and diesel.

The broader picture for India

The CNG price hike lands alongside other signs of West Asia-linked cost pressure rippling through India's energy economy. Broader estimates suggest the ongoing Strait of Hormuz disruption has already added billions of dollars to India's annual fossil fuel import bill, given the country's heavy reliance on imported crude and LNG. With India importing the vast majority of its natural gas needs, any prolonged disruption to Gulf shipping lanes is likely to keep upward pressure on city gas prices in Delhi and other CNG-dependent metros in the weeks ahead, unless there is a de-escalation in the regional conflict or a meaningful increase in alternative LNG supply reaching Indian shores.

For now, IGL has not indicated whether further revisions are imminent, saying pricing will continue to be calibrated against international market movements.

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