Conflict sees India facing a critical supply gap in LPG

The escalated armed conflict in the Middle East has sent ripples across global energy markets, but few countries are as exposed as India. As one of the world’s largest importers of LPG, the country now faces a critical supply gap, following the ‘technical’ closure of the Strait of Hormuz.  

While the government has been struggling to source LPG from alternative suppliers, technical constraints in refining and LPG production, razor-thin reserves, and longer voyagers from the alternative suppliers suggests that relief will be neither quick nor straightforward.

India’s LPG import dependence and the Middle East factor

India’s LPG demand has grown steadily over the past decade, with consumption reaching 33 million tonnes in 2025, driven by rising residential consumption. However, its domestic LPG production caters to less than 40% of demand, leaving the country heavily dependent on imports. This is further amplified by the concentration of supply sources, with 90% of the supply coming from the Middle East.  

India is gradually diversifying its supply sources, with the share of the US increasing to 6% in 2025 and expected to rise further to 10% in 2026 (and possibly more), following the supply agreement for 2.2 million tonnes of US LPG signed by Indian refiners in October 2025. 

The hidden vulnerability: 10-day reserve

The current crisis has exposed a structural weakness: India’s lack of strategic LPG reserves. Unlike crude oil, for which the country maintains significant strategic reserves, the LPG supply chain operates on a ‘just-in-time’ basis, with current LPG reserves sufficient for only 7–10 days of consumption. Thus, disruption at the Strait of Hormuz put instant pressure on inventories and led to domestic shortages. Without robust stockpiles, the country remains one shipping delay away from an LPG supply shortage.

LPG shortage crisis looming?

Drewry projects a supply gap of 1.0 million tonnes during March and April 2026, despite the emergency measures 
implemented by the Indian government. 

Steps have been takento manage the crisis, but relief remains limited

 

Faced with supply concerns, the government implemented several emergency measures to manage the shortage. However, structural constraints mean that these efforts can only provide limited relief in the short term, said the analysis.

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