India's state-run fuel retailers are sitting on a cooking gas glut after months of frantic purchasing to offset Persian Gulf supply disruptions. Cargoes trapped by Red Sea shipping attacks prompted Indian Oil Corp, Bharat Petroleum, and Hindustan Petroleum to over-order liquefied petroleum gas (LPG), leaving them with inventories that now exceed domestic demand.

The surplus has forced the three retailers to slash spot market purchases and delay scheduled cargoes. With storage capacity at Kandla, Mumbai, and Visakhapatnam terminals nearing limits, companies are diverting vessels to alternative ports or selling excess volumes at discounted rates to industrial buyers. This marks a sharp reversal from late 2023, when the same firms paid premiums of $50-70 per tonne above Saudi Aramco's contract price to secure replacement supplies.

For the LPG market, the swing from shortage to surplus pressures Middle East exporters who redirected cargoes to India during the crisis. Saudi Aramco and QatarEnergy now face reduced Indian offtake just as seasonal demand typically rises. Domestic LPG prices, which the government caps for household consumers, may see downward revision pressure if the overhang persists through the monsoon season.

Analysts estimate inventory normalization could take 6-8 weeks if retailers maintain current import cuts. The episode highlights the fragility of India's import-dependent energy supply chain and the financial risk of panic procurement without hedging mechanisms.