As energy supply disruptions spread during the Middle East crisis, India diversified its LPG imports by tapping suppliers across the globe.As uncertainty gripped global energy markets after late February, the country significantly diversified its LPG sourcing, increasing imports from the United States, Iran and several other nations to reduce its dependence on the Gulf region. At the same time, state-run fuel retailers absorbed a substantial portion of the rise in global prices, cushioning the impact on domestic consumers.Prior to the conflict, around 90% of India’s LPG imports were sourced from the Middle East, making the country highly vulnerable to disruptions in the region. According to a Crisil report, the share of LPG imports from the United States rose sharply to nearly one-third of total imports by April 2026, compared with just 8% in February.The change was supported by a 2.2 million tonne-per-year LPG supply agreement signed with the United States in late 2025. The deal is equivalent to around 10% of India’s annual LPG import requirement. Iran also returned to India’s import basket, contributing about 6% of imports in April. Additional supplies were sourced from Argentina, Chile, France and the Netherlands.While the diversification helped ensure supply continuity during the conflict, it also resulted in longer supply routes and increased freight costs.The disruption had a notable impact on demand. LPG consumption declined to 2.47 million tonnes in April from 3.2 million tonnes in February as tighter supplies and rising prices affected usage.India’s LPG consumption had grown 6% to a record 33.2 million tonnes in fiscal 2026. However, demand fell 13% year-on-year in both March and April before declining 20% in May.The sharpest fall was seen among commercial and industrial consumers, whose consumption dropped more significantly than household demand as market-linked users reacted quickly to higher prices and supply limitations.
LPG prices jump
According to Crisil, the conflict also led to a steep rise in global LPG prices. The Saudi Aramco Contract Price, which serves as the benchmark for Indian LPG imports, increased 46% between February and June amid concerns over supply risks and higher freight charges.Despite the rise in international prices, only a part of the increase was passed on to domestic consumers. The price of a 14.2-kg household LPG cylinder in Delhi increased by around 10% between February and June, while the price of a 19-kg commercial cylinder rose by more than 79%.The relatively modest increase in household cooking gas prices resulted in higher under-recoveries for oil marketing companies as procurement costs rose faster than retail prices. The report said under-recoveries on domestic LPG cylinders in Delhi reached Rs 651 per cylinder in May, while cumulative losses borne by fuel retailers between March and May were estimated at nearly Rs 22,000 crore.With tensions in the region easing and key trade routes potentially reopening, immediate concerns over LPG supplies are expected to ease and global prices could moderate.However, the report flagged that the disruption highlighted India;s continued dependence on imported LPG and the risks associated with concentrated sourcing. It added that although diversification and increased domestic production helped reduce the impact of the conflict, the sector remains exposed to geopolitical risks, freight market volatility and fluctuations in international energy prices, reinforcing the need for a broader import portfolio.
