With disruptions extending to both Hormuz and the Red Sea, shipping routes were reconfigured around the Cape of Good Hope. This has historically increased transit times by approximately 30% and freight costs by 40-60%, alongside a spike in insurance premiums.

To mitigate these risks, India deployed naval and diplomatic tools. Under Operation Sankalp, Indian naval escorts ensured safer passage for critical energy shipments. Concurrently, selective access through Hormuz was maintained via diplomatic channels, reducing the probability of extreme supply disruptions.

The payoff was clear: while costs increased, physical supply continuity was preserved.

and

India's second and arguably more consequential policy response was to decouple global price shocks from domestic retail prices through a combination of fiscal absorption and administrative controls.

The divergence between input costs and retail prices was stark.

Analysts suggest that under full pass-through of global price shocks, the increase could be significantly higher, given the sharp rise in international LPG benchmarks. In reality, prices rose by only about ₹60 (roughly 7%). This gap was bridged through a layered absorption architecture. Oil Marketing Companies (OMCs) bore under-recoveries estimated at ₹40,000 crore, while the government provided compensation of around ₹30,000 crore. Targeted subsidies under PMUY further insulated vulnerable households. The net effect was that most of the price shock was absorbed upstream by public sector balance sheets rather than being transmitted to consumers.

The containment strategy was even more pronounced in petrol and diesel pricing. The government implemented excise duty cuts of ₹10 per litre on both fuels, reduced diesel duties effectively to zero, and imposed export levies to redirect supply towards the domestic market. As a result, retail prices remained largely stable despite elevated global crude prices.

Source -> https://www.ndtv.com/opinion/iran-israel-war-why-have-indias-fuel-prices-remained-unchanged-even-as-europe-sees-50-spikes-11306372