Due to tensions in the Middle East, India—along with the rest of the world—is facing a gas shortage. However, especially in the case of India, the country may have to grapple with this challenge for the next three to four years. In media reports, a senior government official said the disruptions to the global LPG supply chain could take three to four years to recover, as it is still unclear whether production has only been halted temporarily or suffered permanent damage.
India is heavily dependent on West Asia for its LPG supply. In response to US and Israeli military actions, Iran launched attacks on regional energy infrastructure and blockaded the Strait of Hormuz; This move has had a serious impact on India’s LPG supply. Speaking on condition of anonymity in a *Moneycontrol* report, an official said that based on information received from suppliers, it could take at least three years—and possibly longer—for supplies to resume. The official also highlighted the increasing risks associated with India’s imports as well as rising cost pressures.
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India’s dependence on LPG imports remains high; About 60 percent of our total consumption is met through imports. Before the outbreak of hostilities, approximately 90 percent of these supplies were transported through the Strait of Hormuz. However, by March 24, the share of imports from Gulf countries had dropped to 55 percent. This shift reflects both supply disruptions and the fact that India has successfully identified alternative supply routes.
a long way ahead
Even after redirecting supply lines and identifying new sources, the residual impact of these supply disruptions could remain at 40 to 50 percent levels, according to a report released in April by Rubix Data Sciences and Vayana Trade Exchange. Rubix Data Sciences is a risk management and analytics firm, while Vayana Trade Exchange serves as a platform for supply-chain finance and trade data. An official said the government is focusing on maintaining continuous supply of LPG to households, and is also exploring new supply options to meet the existing shortage.
The official explained that restoration of LPG supply may take a long time, as many important sources of LPG have closed their operations. The actual reason for this “pause”—whether the oil wells have completely dried up or production has stopped altogether—is not clear; However, the suppliers themselves are saying that it will take at least three years for a complete recovery.
The official said emergency measures implemented during the COVID-19 pandemic could once again prove critical in mitigating the impact of ongoing supply disruptions. These measures include increasing import sources, changing shipping routes, increasing domestic production and managing demand. The main focus of the government will be on managing consumption patterns and ensuring that there is no interruption in the supply of LPG to households.
Less storage, higher prices
According to reports, India’s annual LPG demand is around 33 million tonnes; However, by mid-March, the country had only storage capacity equivalent to 15 days of consumption. Under these circumstances, any change in the source of supply increases the risk of short-term supply disruptions and exacerbates the impact of price fluctuations. Since mid-March, the price of domestic LPG cylinders has increased by ₹60, while the price of commercial cylinders has increased by ₹115 during the same period.
Dependence on Gulf countries
Overall, the UAE, Saudi Arabia, Qatar, Kuwait, Bahrain and Oman together account for 92 percent of India’s LPG supply—a trade worth $6 billion in fiscal 2025. The UAE, which has suffered the most from attacks by Iran, accounted for 41 percent of these imports, followed by Qatar at 22 percent. Due to this disruption, freight costs and insurance premiums have increased, which is expected to increase LPG prices. Gross refining margins may also be under pressure from emergency measures directing refineries to increase LPG production.
Higher LPG prices are impacting commercial customers, such as hotels, restaurants and small, medium and large scale industries. Due to this, the subsidy burden on the oil marketing companies responsible for the supply of domestic cylinders is also increasing. Despite being a net exporter of refined petroleum products, India remains dependent on imports for fuels such as LPG, naphtha and fuel oil, making it vulnerable to global price fluctuations and supply disruptions.
