LPG Prices From February 1: Will 14.2KG, 19KG LPG Cylinder Prices Rise Or Fall Next Month? Budget In Focus!

LPG Prices: With the month of February just around the corner, once again the focus has shifted towards LPG prices. Oil marketing companies (OMCs) revise prices of LPG every month. And this time, the price revision falls on the Budget day. Going by the past data, LPG prices were hiked in last year's interim budget, but reduced before the full-fledged Budget 2024 announcement under Modi 3.0. What to expect from Budget 2025 for LPG prices?

LPG Prices In India:

After keeping the prices unchanged for six months straight, OMCs started the new year by trimming LPG prices of 19KG cylinders. The 19Kg cylinder prices were brought down by Rs 14.5 to Rs 16 across metro cities with effect from January 1, 2025. The city of Kolkata saw the most cuts in LPG prices; however, the cheapest LPG is being sold in Mumbai compared to Kolkata, Chennai, and Mumbai.

However, LPG prices of 14.2kg cylinders have remained unchanged since March 2024.

Here are the latest prices of 19kg LPG cylinders from January 1, 2025.

LPG Prices In Delhi: 19Kg LPG cylinder is at Rs 1,804, while 14.2Kg LPG price is at Rs 803.

LPG Prices In Mumbai: In the financial hub, currently the 19kg LPG price is at Rs 1,756 and that of 14.2kg LPG cylinder is available at Rs 802.50.

LPG Prices In Kolkata: Here, 19Kg and 14.2Kg LPG prices are at Rs 1,911 and Rs 829 respectively.

LPG Prices In Chennai: In this southern city, 19kg and 14.2 kg prices are at Rs 1,966 and Rs 818.50 per cylinder respectively.

Will Budget Day Drive LPG Prices?

Last year, due to Lok Sabha Election 2024, on February 1st, interim budget was presented first by FM Nirmala Sitharaman. Ahead of that interim budget announcement, OMCs had hiked prices of LPG. The 19Kg LPG cylinder price was increased by Rs 12.5 to Rs 18 across metro cities by Indian Oil.

But after the NDA government's victory in 2024 election, a full-fledged Budget was presented by Sitharaman in July month. Ahead of the full-fledged Budget 2024, 19kg cylinder prices were trimmed sharply by Rs 30 to Rs 31 by Indian Oil across metro cities.

Considering the previous month's cut, LPG prices may see similar trend in February. Also, expectations of allocation of subsidy towards under-recovery in LPG, is seen as a driving factor OMCs like BPCL, Indian Oil and HPCL.

Brokerage Philip Capital in its note said, "PSU OMCs have been incurring under-recovery for most of CY24. Cumulative under-recovery at the end of 9MFY25 could be in excess of Rs 250bn. LPG is a regulated product, and eligible for subsidy from the government in case of under-recovery. Various media reports indicate an allocation of Rs 350bn as subsidy towards LPG under-recovery, of which Rs 100bn would be allocated to FY25 and Rs 250bn to FY26." The move is seen as positive for OMCs.

LPG Price in India is determined by the state-run oil companies and is revised on a monthly basis. Almost all the households in India have an LPG connection and it is mainly used for cooking purposes. An increase in LPG prices will affect the common man in general as they have to bear the brunt of the rising fuel prices in the current market scenario. Currently, the government is providing subsidies on the sale of domestic LPG cylinders to consumers. The subsidy amount is directly credited to the individual's bank account after the purchase of the cylinder. The subsidy amount varies every month and is dependent on the changes in the average international benchmark LPG prices added to the foreign exchange rate.

LPG Prices Calculation: The prices of LPG are based on the formula --- import parity price (IPP). Meanwhile, the calculation of IPP is based on Saudi Aramco's LPG price including charges like FOB (Free on Board) price; Insurance; Custom Duty; Ocean Freight Price; and Port costs, etc. Other factors are --- GST, Bottling charges; Inland logistic costs; Dealer commission; Marketing costs; and Margins charged by OMC.

International crude prices also play a key role in determining LPG prices. A ShivGas report dated August last year highlighted that as the gas is derived from the process of refining crude oil, it is directly related to its price. Any increase in the price of crude oil is bound to affect the cost of gas production. The fluctuation in the price of crude boil in the market can directly lead to the change in the price of producing LPG.

Currently, crude oil prices are lower. Brent Crude oil futures are below $77.4 per barrel, while WTI crude oil futures erased their $74 mark.

As per Trading Economics data, the White House noted that Trump still plans to issue 25% tariffs on Canada and Mexico while weighing fresh tariffs on China. Investors are also assessing supply disruptions in Libya, where oil exports were briefly halted due to protests, but concerns eased after Libya's state-run oil company confirmed that exports had resumed. Meanwhile, pressure on oil prices came from reports that Russia was testing US sanctions by sending oil on US-blacklisted vessels to India, amplifying negative sentiment from disappointing data in China and warmer US weather forecasts. On the supply side, API data showed US crude stocks rose by 2.86 million barrels last week. If confirmed by official data later in the day, it would be the first increase in 10 weeks.