What Happened
- The Indian government stated it will not ration petrol and diesel, citing 30–35 days of crude oil stocks (including Strategic Petroleum Reserves) and 20–30 days of refined products, providing short-term cushion against the West Asia supply disruption.
- However, the LNG supply situation is far more acute: Petronet LNG issued a force majeure notice to QatarEnergy after Iranian drone strikes on Ras Laffan made safe navigation to Qatar's LNG loading terminals impossible; GAIL's LNG allocation was subsequently reduced to zero from March 4, 2026.
- LPG stocks are critically short — approximately 15 days of supply — with over 70% of India's LPG directly imported, predominantly from the Middle East; tanker transits of LPG through the Strait of Hormuz fell 94% in the immediate aftermath of the conflict.
- India's crude and LNG flows from the Persian Gulf effectively stopped for at least 48 hours, affecting 50% of both import streams; crude oil tanker transits through the Strait of Hormuz fell 88%.
- GAIL and other gas companies are prioritising household cooking gas (LPG) and CNG supplies for transport, while industrial consumers of LNG (fertiliser plants, power plants, city gas distribution) have seen allocations cut by up to 40%.
Static Topic Bridges
India's Strategic Petroleum Reserves (SPR)
Strategic Petroleum Reserves are government-maintained emergency stockpiles of crude oil designed to cushion supply disruptions caused by wars, embargoes, or natural disasters. India established its SPR programme following lessons from the 1990 Gulf War, which caused supply disruptions and contributed to India's 1991 Balance of Payments crisis. The reserves are managed by Indian Strategic Petroleum Reserves Limited (ISPRL), a subsidiary of the Oil Industry Development Board (OIDB).
- Three SPR facilities: Vishakhapatnam (1.33 MMT), Mangaluru (1.5 MMT), Padur (2.5 MMT) — total: 5.33 million metric tonnes
- Current SPR capacity covers approximately 9.5 days of India's daily oil requirement
- Expansion plan: six new SPR sites being added; post-expansion total of 11.83 MMT (~22 days of demand)
- Long-term IEA target: 90 days of net imports in reserves (India is far below this)
- ADNOC (Abu Dhabi) has crude stored in India's Padur SPR under a commercial arrangement allowing re-export
Connection to this news: India's 30–35 day crude stock (combining commercial stocks and SPR) provides temporary relief, but does not address the LPG and LNG crunch — which have no comparable strategic reserve system — making the asymmetric vulnerability stark.
India's LPG Supply Chain and the Household Energy Nexus
India is the world's second-largest LPG consumer (after China) and one of the largest importers globally. LPG (Liquefied Petroleum Gas, mainly propane and butane) is the primary cooking fuel for hundreds of millions of Indian households, including beneficiaries of the Pradhan Mantri Ujjwala Yojana (PMUY) scheme which connected over 10 crore BPL households to LPG. Disruption in LPG supply has direct consequences for household welfare, particularly for poorer households with no alternatives.
- India's LPG imports: over 90% sourced from the Middle East; India imports more than 70% of its total LPG requirement
- PMUY: Launched 2016; over 10 crore connections to BPL households; expanded to Ujjwala 2.0 (2021) targeting migrant workers
- LPG tanker transits through Hormuz fell 94% immediately after the conflict escalated
- India's immediate LPG stock: ~15 days (critically low)
- Domestic LPG production: limited, from refineries; insufficient to substitute for imports in the short term
Connection to this news: The 15-day LPG stock and 94% drop in tanker transits represents the most immediate welfare risk from the West Asia conflict — threatening cooking fuel availability for crore of Indian households.
GAIL and India's Natural Gas Distribution Infrastructure
GAIL (Gas Authority of India Limited) is India's largest state-owned natural gas company, responsible for gas transmission through the national pipeline network (~18,000 km of pipelines) and gas marketing. GAIL is a key offtaker of imported LNG from Petronet LNG and distributes gas to city gas distribution (CGD) companies, fertiliser plants, power generators, and industrial consumers.
- GAIL transmits ~80% of India's natural gas through its pipeline network
- Key LNG terminals: Petronet LNG's Dahej (17.5 MMTPA, Gujarat) and Kochi (5 MMTPA, Kerala) terminals
- Gas allocation hierarchy in shortage: households (CNG, PNG cooking) > fertiliser production > power generation > industrial consumers
- India's natural gas share in energy mix: ~6% (target: 15% by 2030 under National Gas Grid plan)
- GAIL's force majeure allows it to pass on supply cuts to downstream industrial consumers without contractual penalty
Connection to this news: GAIL's force majeure declaration (with LNG allocation cut to zero) means that India's gas distribution chain has snapped — fertiliser plants, power generators, and industrial units dependent on piped gas face shutdowns or fuel switching, with cascading economic impacts.
India's Downstream Petroleum Sector: OMCs and Supply Chain
India's downstream oil sector is dominated by three state-owned Oil Marketing Companies (OMCs): Indian Oil Corporation (IOC), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL). They import crude, refine it, and distribute petroleum products through a vast network. OMCs hold the commercial crude inventory that provides the 30–35 days of buffer the government cited.
- IOC, BPCL, HPCL operate ~23 refineries with total capacity of ~250 MMTPA
- Combined commercial crude stocks: 20–25 days; SPR adds ~9.5 days = total ~30–35 days
- The government confirmed: no rationing of petrol and diesel planned as of March 5, 2026
- However, prices not yet raised — absorbing the import cost increase, creating fiscal strain
- India's refining capacity is a strategic asset; the bottleneck is crude supply, not refining
Connection to this news: The government's "no rationing" assurance is credible for the short term (30–35 days of crude stock), but only holds if the conflict is resolved or alternative crude routing via Cape of Good Hope (bypassing Hormuz) is established within weeks.
Key Facts & Data
- India's crude oil stocks (commercial + SPR): 30–35 days of requirement
- Petroleum products stocks: 20–30 days
- LPG stocks: approximately 15 days (critically low)
- LNG: GAIL allocation cut to zero from March 4, 2026 (Petronet force majeure to QatarEnergy)
- LPG tanker transits through Hormuz: fell 94% after conflict escalated
- Crude oil tanker transits through Hormuz: fell 88%
- India's LPG import dependence: over 90% from Middle East; 70%+ of total requirement imported
- India is the world's second-largest LPG consumer
- PMUY beneficiaries: over 10 crore BPL households connected to LPG
- India's total LNG terminal capacity: ~22 MMTPA (Dahej 17.5 + Kochi 5 + others)