Long queues at petrol pumps jammed rush-hour traffic in major Indian cities and taxis stopped running as a strike by state-run oil employees demanding higher pay began to bite on Friday.

The shutdown entered its third day after talks failed late on Thursday between the government and officials of state-run firms that dominate India's energy sector and control almost the entire supply of transport fuels, natural gas and domestic crude.

Up to 80 per cent of petrol stations in large cities like Mumbai, Delhi, Bangalore and Kolkata had run out of stocks and supplies to airlines may also fall, industry officials said.

"We are getting a large-scale dry out of petrol stations across the country. Over the night and this morning a large number has gone dry," said N. Srikumar, executive director for corporate communications at state-run Indian Oil Corp.

Alongside a separate truckers strike, the oil sector shutdown has inconvenienced millions of people and threatens to push up prices of food and commodities across the country.

Officials at IOC, which runs about 18,000 of India's 35,000 petrol pumps, and other state-run firms such as Oil and Natural Gas Corp began the strike on Wednesday.

The few petrol stations that had stocks struggled to meet the heavy rush of motorists.

"I had to work till 3:00 a.m. because there was a long queue of vehicles trying to tank up," said Dhruva Gharai, the owner of a gas station in Kolkata.

Some petrol stations reported highest-ever daily sales as motorists filled up in panic. "It will take at least a week for things to normalise," Gharai said.

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