India is struggling to find enough cooking gas (LPG) amidst the largest global supply chain disruption that has occurred within the last 130 years.
Let that sink in first.
But no, it isn’t just a supply issue, it is actually compounded by several factors including increased prices, decreased cargo availability, and the sudden failure of India’s longstanding routes for importation of LPG due to various regional conflicts occurring within Western Asia.
The Beginning of Beginning: How Did The Crisis Unfold?
The crisis hit and there is no hiding that it hit India HARD. The LPG crisis affecting India’s economy began with a disruption in the regional market of the Middle East, where approximately 30% of the total supply of LPG is generated and exported from.
As reported by The Hindu Business Line, there have been many conflicts occurring in Western Asia which have created a shaking impact on the global LPG market by decreasing the available amount of cargo for exportation and decreasing the size of the spot supply pool. As a result, this dramatic disruption in the regional LPG market has greatly affected the economy of India, which historically has relied greatly on suppliers located in the Gulf Region.
Global tension in Western Asia resulting from ongoing conflicts also had an impact on the Strait of Hormuz, a critical chokepoint for global energy.
As stated by Petroleum Minister Hardeep Singh Puri in Parliament, “The world has not faced a moment like this in modern energy history.”
In addition, Mr. Puri explained that over 20% of global crude oil, natural gas, and LPG transportation passes through the Strait of Hormuz which creates a telling effect on the entire world in the event of a disruption.
India Diversifies LPG Imports
India instantly experienced a significant impact as a result of the disruption in the regional LPG market. S&P Commodities at Sea (CAS) has outlined in a report to the Hindu BusinessLine that:
– India’s weekly LPG imports decreased from 322,000 metric tonnes( (MT) during the week of March 5 to 265,000 MT (week ending March 19), while crude oil imports from West Asia decreased to only 89,000 MT.
– West Asia’s percentage of imported LPG decreased to only 34%. This is the lowest percentage since January.
– West Asia accounted for 100% of LPG imports just one week prior to this report.
In addition to replacing this gap through alternative LPG supplies, India experienced a rapid increase to 176,000 MT alternative LPG supplies over the course of one week, as opposed to zero alternative supply the week before.
This increase in imports was not a gradual transition to diversify away from West Asia’s oil but was an emergency change that had to be made to quickly arrange for the continued importation of crude oil from West Asia.
India has transitioned from an overreliance upon Gulf countries for its energy imports to diversifying its energy imports.
Previously:
– Approximately 60% of its LPG imports came from Qatar, UAE, Saudi Arabia, and Kuwait.
Now:
– The United States, Norway, Canada, Algeria, and Russia are supplying India with LPG.
Hardeep Singh Puri stated in Parliament that India has “actively diversified” its energy supply through LPG imports.
He also noted that the bigger transformation of India’s energy supply:
“Non-Hormuz sourcing has risen to approximately 70% of crude imports, up from 55% before the conflict began.”
India’s current sources of Crude Oil Imports have increased from 27 countries to 40 Countries since 2006-2007.
This diversification has occurred as a result and is not just a reaction to international market conditions. Instead, it is an ongoing structural change.The United States is now a major supplier of Butane (LPG)—a key supplier alternative. According to The Times of India:
• India is expected to import 2.2 MT of LPG from the U.S. by 2026.
• India has already imported 480,000 MT within the first two months of 2026.
• This is approximately equal to 11 Very Large Gas Carrier (VLGC) ships.
The amount of U.S. LPG shipped to India has passed the amount shipped by Gulf countries—a big influence—and yet the transition to U.S. shipments requires many more days.
• Shipments from the Gulf: 7–8 days
• Shipments from the U.S.: ~45 days
• Shipments from Russia and Japan: 35–40 days
In a nutshell, India prefers security over speed.
Talks Expand and Include Russia and Japan
India is seeking options with more than just one alternative.
An official confirmed that multiple countries were involved in discussions.
• Russian Cargoes are expected in the next month.
• Ongoing discussions regarding Japan; probable volumes will remain low.
“The objective is to arrange as much as possible from wherever possible,” said a source to The Hindu BusinessLine.
The Ministry of External Affairs also supports the statement.
This shows a strategy of multiple sources for LPG as opposed to just a replacement for Gulf sources.
Prices are SO on the rise
Due to disruptions in supply, price increases may occur. Prices for propane and butane increased to $648/ton and $642/ton, respectively, as reported by Platts (S&P Global Energy). From March 17th to March 18th, both increased by $9/ton in just one day. The tightening market has created steady demand while supply continues to go down the graph.
Long-Lived Supply Chains Due to Diplomatic Engagement
India isn’t just purchasing LPG; it is also working to secure access to LPG through diplomatic channels. Charles Kim, an associate director at S&P Global Commodities at Sea, stated, “The silver lining is the ongoing diplomatic dialogue between Iran and India.”
He added, “This engagement helped enable Indian-flagged LPG carriers to transit the region, setting a positive precedent,” and further noted that “Continued cooperation could help more Indian-linked ships pass safely and keep supply routes functional.”
While diplomatic to and forth has permitted Indian-flagged vessels to navigate through the region that may have been impacted by tensions, Mr. Kim did state that continued cooperation may provide opportunities for many other Indian-flagged vessels to transit safely and keep supply routes open.
Chat, Are we under pressure?
While India has faced disruptions, thus far India has stabilised supply (at least) temporarily. Some US cargoes have already arrived in India, oil refiners have operated at full capacity, in some cases exceeding 100% of capacity, and the Indian government has declared a priority for domestic LPG consumption over commercial consumption.
India is also utilising a two-fold approach to securing LPG. It has been implementing long-term contracts (similar to the current contract with the US) and is concurrently purchasing “spot” cargoes from multiple regions.
India Diversifies Imports As Part Of A Larger Shift
This situation is not simply a passing crisis; it is an energy transformation for India, and it must be realised like that. India has transitioned from having a regional supply dependency to sourcing from multiple countries, from having a very quick and concentrated supply to having a slow-paced and more diversified supply chain, and most importantly, energy security has risen to the level of a diplomatic and strategic priority.
As Hardeep Singh Puri has said regarding the unprecedented nature of this moment, he also indicates that India’s response shows that India is no longer simply reacting to the global shocks, but is actively re-designing its strategy regarding how it survives global shocks.