Explained: Why India faces LPG shortage amid ongoing West Asia war

India relies heavily on LPG imports from West Asia routed through the Strait of Hormuz. The ongoing conflict has forced the Centre to divert domestic output to protect households

The ongoing war in West Asia has triggered an LPG crisis in India, with reports of restaurants limiting operations and panic buying of cylinders by customers. While the Centre has directed refiners and petrochemical complexes to maximise LPG output and prioritise household cooking gas supply, limited stockpiles are emerging as a cause for concern.

 

Let's decode why the West Asia conflict is affecting LPG supply in India.

 

India’s dependence on West Asia LPG

 

India is one of the world’s largest LPG consumers, driven by the expansion of household cooking gas connections under schemes such as the Pradhan Mantri Ujjwala Yojana. However, domestic production meets only part of the country’s demand.

 

 

Data from the Petroleum Planning and Analysis Cell (PPAC) show that LPG production remains significantly lower than consumption. In January 2026, India produced 1.158 million tonnes of LPG, while imports stood at 2.192 million tonnes in the same month, underscoring the country’s heavy reliance on imported cooking gas.

 

Around 62–65 per cent of total demand is met through imports. More than 90 per cent of roughly 20.5 million metric tonnes of LPG imports in 2024 came from West Asian suppliers, with most shipments routed through the Strait of Hormuz.

 

Strait of Hormuz disruption and shipping risks

 

The war has increased risks for vessels travelling through the Strait of Hormuz, a narrow waterway between Iran and Oman and a critical global energy chokepoint.

 

Maritime insurers have either withdrawn or sharply raised war-risk coverage for vessels operating in parts of the Gulf. A Reuters report stated that premiums for war coverage have surged, in some cases by more than 1,000 per cent, prompting insurers to cancel cover for ships.

 

This raises shipping costs and discourages shipowners from accepting voyages in high-risk areas.

 

Shipping data and analysis by S&P Global also indicate that tanker freight rates in the Persian Gulf have surged as traffic through Hormuz declined following the conflict.

 

This has led to a reduced number of ships willing to load LPG cargoes from Gulf producers and increased delivery costs and delays.

 

How supply disruptions affect India’s LPG market

 

Because LPG imports form a major part of India’s supply chain, any disruption to shipments quickly affects domestic availability.

 

LPG is imported mainly by Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL), which together supply more than 99 per cent of domestic LPG cylinders.

 

To stabilise supply, the Centre has directed refiners and petrochemical complexes to maximise LPG production and divert certain hydrocarbon streams into LPG output instead of petrochemical feedstocks.

 

The government has also invoked provisions under the Essential Commodities Act to prioritise LPG availability for households.

 

Commercial LPG hit

 

The priority has been to protect domestic cooking gas supply, leaving commercial LPG users, including restaurants, hotels and small industries, facing the greatest shortages.

 

The National Restaurant Association of India has warned that 50–60 per cent of restaurants could shut down within two to three days if commercial LPG supply is not restored.

 

Some states have imposed temporary restrictions on commercial cylinder usage and distribution to prevent hoarding and black marketing.

 

Panic buying worsens shortage

 

The supply crunch has been amplified by panic buying. Reports of disruption triggered rushes at distribution centres in Uttar Pradesh's Lakhimpur Kheri, with customers seeking early refills, reported news agency PTI.

 

The spike in demand has also led to black-market activity in some areas, with commercial cylinders reportedly sold at higher prices.

 

After the war broke out, OMCs increased LPG prices. Last week, domestic LPG prices were raised by ₹60 per cylinder, while commercial LPG prices rose by ₹114.5 per cylinder nationwide.

 

Structural vulnerability in storage

 

Unlike crude oil, LPG is harder and more expensive to store because it must be kept in liquid form under pressure. It is stored in pressurised cylinders, spherical tanks, mounded storage bullets or underground caverns, requiring specialised infrastructure.

 

India’s total LPG storage capacity is estimated at around 1.9 million tonnes, equivalent to roughly 22 days of supply, according to S&P Global Commodity Insights. This is significantly lower than strategic crude oil reserves.

 

High infrastructure costs, geological requirements for cavern storage and the dispersed nature of LPG distribution through bottling plants have constrained stockpiling. Rapid growth in LPG demand has also outpaced storage expansion.

 

Despite diversification efforts, including sourcing LPG from the United States and other regions, India remains heavily dependent on West Asia.

 

For now, the government’s focus remains on protecting household cooking gas supply while managing shortages in the commercial market. But if disruptions to Gulf shipping persist, India could face tighter LPG availability and higher import costs in the coming months.