What Happened
- India faces a potential LPG shortage as military conflict involving Iran has effectively blocked vessel passage through the Strait of Hormuz, trapping LPG cargoes destined for India in the Persian Gulf.
- A shortfall could hit tens of millions of Indian households if gas cargoes due in March do not begin moving within days, with India importing over 90% of its LPG from Middle Eastern suppliers.
- The disruption follows US-Israeli strikes on Iran starting February 28, 2026, after which Iran's Revolutionary Guard Corps (IRGC) issued warnings prohibiting vessel passage through the strait, causing a near-complete halt in commercial maritime traffic.
- PSU oil companies — Indian Oil Corporation (IOC), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL) — are the primary bulk importers of LPG and are urgently evaluating alternate supply routes and sourcing options.
- The crisis comes at a critical time when India's total LPG consumption stands at over 31 million metric tonnes annually, with approximately 60% met through imports.
Static Topic Bridges
Strait of Hormuz — World's Most Critical Energy Chokepoint
The Strait of Hormuz is a narrow waterway located between Iran to the north and Oman to the south, connecting the Persian Gulf with the Gulf of Oman and Arabian Sea. It is approximately 33 kilometres wide at its narrowest navigable point, with two two-mile shipping lanes separated by a buffer zone. Despite its modest dimensions, the strait carries roughly 20 million barrels of crude oil and LNG daily — approximately 20% of the world's total consumption — making it the world's most critical energy chokepoint. Any disruption severely impacts global energy supply chains within days.
- 20% of global daily oil consumption transits the Strait of Hormuz
- Asian countries receive 89.2% of crude oil and condensate that transits the strait
- India is the second-largest destination at approximately 14.7% of crude oil flows through the strait
- Almost half of India's crude oil imports and about 60% of its natural gas supplies move through the strait
Connection to this news: The blocking of the Strait of Hormuz by Iranian forces has directly trapped LPG cargoes purchased by Indian PSU companies from Middle Eastern suppliers, with no alternative route available for Persian Gulf-origin shipments.
Pradhan Mantri Ujjwala Yojana (PMUY) and India's LPG Welfare Architecture
Pradhan Mantri Ujjwala Yojana was launched in 2016 with the objective of providing free LPG connections to women from Below Poverty Line (BPL) households, replacing traditional biomass-based cooking. The scheme has since expanded significantly, with over 10.33 crore PMUY connections active as of July 2025. For FY 2025-26, the Union Cabinet approved a targeted subsidy allocation of Rs 12,000 crore, with 25 lakh additional connections sanctioned. The scheme is administered through the Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas.
- Over 10.33 crore PMUY connections active as of July 2025
- Average household refills for PMUY beneficiaries rose to 4.5 cylinders per year in FY25 from 3.9 in FY17
- India's total LPG consumption: 31.3 MMT in FY25, projected 33-34 MMT in FY26
- Import dependency: approximately 60% of demand met through imports
Connection to this news: A prolonged shortage would disproportionately impact PMUY beneficiaries — the most vulnerable households who depend on subsidised LPG for clean cooking — and could trigger a welfare crisis if the government cannot secure alternate supplies quickly.
India's Strategic Petroleum Reserves (SPR) Programme
India maintains Strategic Petroleum Reserves through Indian Strategic Petroleum Reserves Limited (ISPRL), a wholly owned subsidiary of the Oil Industry Development Board under the Ministry of Petroleum and Natural Gas. Phase 1 of the programme established underground storage facilities with a combined capacity of 5.33 Million Metric Tonnes (MMT) at three locations: Visakhapatnam (1.33 MMT), Mangaluru (1.5 MMT), and Padur in Karnataka (2.5 MMT). This reserve can provide approximately 9.5 days of consumption cover. Phase 2 expansion is underway, targeting 6.5 MMT additional capacity at Chandikhol (Odisha) and Padur.
- Phase 1 total capacity: 5.33 MMT crude oil across three underground facilities
- Visakhapatnam: 1.33 MMT; Mangaluru: 1.5 MMT; Padur (Karnataka): 2.5 MMT
- Phase 2 planned capacity: 6.5 MMT at Chandikhol (Odisha) and Padur
- Current reserves provide approximately 9.5 days of consumption cover
- SPRs cover crude oil only — not LPG, highlighting a gap in LPG emergency reserves
Connection to this news: While India has strategic petroleum reserves for crude oil, there is no comparable strategic reserve for LPG, meaning any supply disruption translates almost immediately into a consumer-level shortage, underscoring the need for diversification and LPG buffer stocks.
India's LPG Import Structure and Supplier Diversification
India's LPG market relies on three PSU companies — IOC, BPCL, and HPCL — as the primary bulk importers, overseen by PPAC. Historically, the Middle East Gulf has supplied the majority of India's LPG, with 55-60% of demand met through imports over the past decade. Recently, India has moved to diversify sources, with a notable India-US LPG agreement involving 2.2 million tonnes per annum of long-term volume — reducing historical reliance on Middle Eastern producers. However, structural dependence remains high, with over 90% of LPG imports still originating from the Middle East.
- India imports approximately 60% of its total LPG requirement
- Over 90% of LPG imports sourced from the Middle East, primarily Qatar, Saudi Arabia, UAE
- India-US LPG agreement: 2.2 MMTPA long-term volume being developed
- PPAC (Petroleum Planning and Analysis Cell) oversees pricing and import coordination
Connection to this news: The near-total dependence on Middle Eastern LPG makes India acutely vulnerable to any disruption in the Strait of Hormuz corridor, as the US supply diversification is a long-term structural shift that provides no immediate relief in a short-term supply crisis.
Key Facts & Data
- India imports over 90% of its LPG from the Middle East
- India's total LPG consumption in FY25: 31.3 MMT; projected FY26: 33-34 MMT
- Approximately 10.33 crore PMUY beneficiary households depend on subsidised LPG
- Strait of Hormuz: 33 km wide at narrowest; carries ~20% of global daily energy supply
- India is the second-largest destination for Strait of Hormuz crude oil flows at 14.7%
- India's strategic petroleum reserve capacity: 5.33 MMT (crude only, ~9.5 days consumption)
- The 2026 Strait of Hormuz crisis began February 28, 2026 following US-Israeli strikes on Iran
- Brent crude rose 10-13% in initial trading; analysts forecast possible $100/barrel if disruptions persist