Iran War Squeezes India's Cooking Gas Supplies: LPG Crisis and Energy Security Challenges
The US-Israeli military strikes on Iran (Operation Epic Fury, launched February 28, 2026) have severely disrupted India's Liquefied Petroleum Gas (LPG) supply chains.
Iran's closure of the Strait of Hormuz in response to the strikes has cut off approximately 90% of India's LPG imports that pass through the strait.
Long queues outside LPG distribution centres, delays of over a week in cylinder deliveries, and black-market price inflation have been reported across India.
India imports approximately 60% of its total LPG consumption; the remaining 40% is produced domestically by refineries.
A three-member committee comprising Executive Directors from IOCL, HPCL, and BPCL was constituted on March 9, 2026 to manage LPG supply during the crisis.
The Central Government approved ₹300 billion (approximately ₹30,000 crore) in compensation to offset LPG under-recoveries by Oil Marketing Companies (OMCs).
Strait of Hormuz: Strategic Chokepoint and India's Exposure
The Strait of Hormuz is a narrow waterway between Iran and Oman connecting the Persian Gulf to the Arabian Sea. It is the world's most critical energy chokepoint, through which approximately 20% of global crude oil, 20% of natural gas (LNG), and 20% of LPG flows daily.
Iran's Hormuz closure has created an acute LPG shortage in India because the country's LPG import portfolio is far more Hormuz-concentrated than its crude oil imports — a structural vulnerability exposed by the conflict.
India's Energy Security Architecture: LPG Supply Chain
LPG in India is primarily distributed by three state-owned Oil Marketing Companies (OMCs): Indian Oil Corporation Limited (IOCL), Hindustan Petroleum Corporation Limited (HPCL), and Bharat Petroleum Corporation Limited (BPCL). These companies import LPG, process it, and distribute through a network of bottling plants and LPG distributors.
The IOCL-HPCL-BPCL committee formation and the government's ₹30,000 crore compensation package are the institutional response — reflecting how OMC losses from LPG under-recoveries get resolved through fiscal transfers, not market pricing.
India's Strategic Response: Neutrality, Diversification, and Domestic Alternatives
India has maintained strategic neutrality in the 2026 Iran war, consistent with its historical policy of non-alignment and strategic autonomy. Simultaneously, the crisis has accelerated focus on energy diversification and domestic production.
Key Details
- India's energy diplomacy: India has trade and energy relationships with both the US/West and Iran — it was a major importer of Iranian crude (especially before US sanctions in 2018-19) and resumed Iranian LPG-related trade where permissible.
- Strategic Petroleum Reserve (SPR): India has underground SPR storage at Visakhapatnam, Mangaluru, and Padur (capacity: ~5.33 MMT of crude) — but no equivalent LPG strategic reserve.
- Demand-side response: sales of induction stoves surged (reportedly thirtyfold on e-commerce platforms) as households sought alternatives to LPG.
- ONGC, Oil India, and domestic refineries have been directed to maximise LPG extraction from refinery gas streams to augment domestic supply.
- Biogas/Compressed Biogas (CBG) under SATAT scheme (Sustainable Alternative Towards Affordable Transportation) could provide medium-term LPG alternatives in rural areas.
- India's stated goal of Energy Transition includes reducing LPG dependence through piped natural gas (PNG) expansion and electric cooking — both long-term shifts.
The LPG crisis underscores the gap in India's energy security infrastructure: while crude oil import diversification has progressed (40 countries, <40% through Hormuz), LPG imports remain dangerously concentrated through Hormuz — a vulnerability that requires both strategic stockpiling and faster domestic alternatives.
- Strait of Hormuz: 20% of global crude, 20% LNG, 20% LPG passes through it daily
- India LPG imports via Hormuz: ~90% of total LPG imports
- India's LPG consumption: ~31 MMT (2026), up from ~15 MMT (2012)
- India's LPG import share: ~60% of consumption imported; ~40% domestic production
- PMUY launched 2016: 10 crore+ LPG connections to BPL households
- OMCs: IOCL, HPCL, BPCL — under Ministry of Petroleum and Natural Gas
- Government compensation for under-recoveries: ₹300 billion (approx ₹30,000 crore) approved
- India's crude import diversification: 40 countries; ~40% through Hormuz (vs 90% for LPG)
- India's SPR: ~5.33 MMT crude at Visakhapatnam, Mangaluru, Padur — no equivalent LPG reserve
- SATAT scheme: Sustainable Alternative Towards Affordable Transportation (Compressed Biogas)
- Brent crude price after conflict: surged 10-13% to ~$80-82/barrel (early March 2026)