LPG prices halved in Russia, what will be the impact in India?

On January 1, 2025, government oil companies will review the prices of LPG (Liquefied Petroleum Gas) and announce new prices. However, LPG inflation in India still remains a major concern for the general public. In contrast, LPG prices in Russia are set to fall to half in December 2024. In Russia, LPG is used in everything from cooking to vehicles, heating, and petrochemical production.

Huge fall in LPG prices in Russia

According to Reuters report, LPG prices in Russia have decreased by 50% in December 2024 compared to November 2024.

• November 2024: LPG price was 28,000 rubles.
• December 2024: Price drops to 14,000 rubles (about $140).
  This directly reflects a halving of prices.

Reason for falling prices

The main reason for falling LPG prices in Russia is the economic sanctions of the European Union.

1. European ban:
   • Russia used to export LPG on a large scale to European countries.
   • From December 20, 2024, the European Union imposed a ban on Russia’s LPG exports.
2. Role of Poland:
   • Poland was the largest importer of LPG from Russia.
   • Poland had proposed to ban Russia’s LPG exports.
3. Supply to Domestic Market:
   • Due to reduction in exports, the supply of LPG in Russia’s domestic market increased, due to which the prices fell.

Russia’s new export markets

As an alternative to Europe, Russia has diverted its LPG exports to other countries.

• Exports to countries like China, Mongolia, Armenia, Georgia, and Azerbaijan have been increased.
• China is considering increasing LPG imports from Russia.

Will India import LPG from Russia?

Considering Russia’s cheap LPG exports, the question arises whether India will also import LPG.

• India imported crude oil from Russia at cheap prices after the Russia-Ukraine war in February 2022.
• However, the benefits of cheap crude oil did not reach consumers.
• If India imports LPG from Russia, it can improve the financial condition of oil companies, but there is still uncertainty in the availability of cheap LPG cylinders to the general public.

Current status of LPG in India

The rising prices of LPG in India remains a matter of concern for consumers.

• Domestic cylinder prices are continuously increasing.
• Both industry and common consumers are affected by inflation.