India’s LPG Crisis Explained: What’s Fuelling It and What It’s Costing You

India is currently facing a severe gas crisis. Beyond the volatility in crude oil prices, India’s supply of liquefied petroleum gas (LPG) and liquefied natural gas (LNG) has been disrupted following the near-complete closure of the Strait of Hormuz after geopolitical tensions escalated in West Asia.

India imports nearly 62% of its LPG annually, about 31.3 million tonnes, most of which is supplied by West Asia. New Delhi’s energy strategy has become particularly vulnerable because, unlike crude oil, India does not have strategic reserves for LPG and LNG. With disruptions expected to continue and no signs of de-escalation in West Asia, India is scrambling to find alternative sources to meet its daily needs.

The gravity of the crisis is already being felt across several major cities including Mumbai, New Delhi, Chennai, Ahmedabad, and Pune, where restaurants are warning of shutdowns as oil marketing companies prioritise domestic supply and curb commercial sales of cylinders.

What Is LPG and LNG?

LPG is a primary cooking fuel in India. It is a by-product of refined crude oil and natural gas processing. The gas primarily consists of propane and butane, compressed into liquid form and stored in cylinders.

LPG has remained a household staple for decades, particularly after the government expanded its reach through policies such as the Pradhan Mantri Ujjwala Yojana, which provides subsidised LPG connections to low-income households.

LNG, meanwhile, is natural gas cooled to –162°C and converted into liquid form, making it easier to transport over long distances via ships.

India imports nearly half of its 190 million standard cubic metres per day (mscmd) natural gas requirement, with 50–60% sourced from West Asia, particularly Qatar and the UAE. Unlike LPG, LNG is supplied across a broader gas network and is used by industries including fertiliser production, power generation, manufacturing, and the automotive sector.

Why Did the Crisis Occur?

The situation in West Asia escalated rapidly following a combined military strike by the US and Israel against Iran. In response, Iran announced the closure of the Strait of Hormuz, a critical artery for global energy trade.

Shipments were either stranded or disrupted, leaving millions of barrels of oil and gas cargo stuck at sea. The Strait handles nearly 20 million barrels per day, accounting for a significant share of global LPG and LNG trade.

Why Do We Not Have Enough Reserves?

Unlike crude oil, which India stores in underground salt caverns for up to 60 days of emergency use, LPG and LNG are significantly harder to stockpile. These gases require specialised high-pressure or cryogenic storage, making long-term storage technologically complex and expensive.

India has recently moved away from a complete “zero-reserve” model. With the commissioning of the HPCL Mangalore cavern in late 2025, alongside the existing Vizag facility, India now has roughly 140,000 tonnes of deep-storage LPG capacity.

However, these caverns represent only a fraction of national demand. India currently holds roughly 25–30 days of LPG stocks and around 10 days of LNG, compared with about 60 days of crude oil reserves.

This narrow buffer is why the closure of the Strait of Hormuz—which handles nearly 85% of India’s LPG imports—has triggered an immediate scramble for alternative supplies.

How Has the Government Responded?

The Centre has invoked the Essential Commodities Act in response to the growing gas crisis and diverted natural gas supplies to priority sectors.

The Ministry of Petroleum and Natural Gas has issued a directive stating that sectors directly impacting millions of consumers—households and transport—will take precedence over other gas-consuming industries.

“We have taken steps to ensure that 100% supply of CNG and PNG to domestic consumers is ensured, and other industries continue to receive 70–80% of their supplies despite the war situation. We are committed to ensuring uninterrupted supply of affordable energy to our domestic consumers. There is no shortage for domestic consumers and no reason to panic,” Union Petroleum Minister Hardeep Singh Puri said in a post on X.

Which Sectors Are Being Prioritised?

Priority has been given to gas supplies for domestic PNG, CNG for transport, LPG production, pipeline compressor fuel, and other essential pipeline operations.

Fertiliser plants have been placed in the second tier of priority, as natural gas serves both as a fuel and feedstock for fertiliser production.

Under the first tier, gas requirements for domestic PNG, CNG transport, LPG production, pipeline compressor fuel, and essential pipeline operations will be met in full based on average consumption over the past six months.

Manufacturing and industrial consumers fall under the third tier, including sectors such as petrochemicals and certain industrial operations. To meet priority-sector demand, gas supplies to some petrochemical facilities may be fully or partially curtailed.

What Is It Costing You?

The LPG crisis is beginning to strain both household budgets and businesses. On March 7, oil marketing companies raised the price of a 14.2-kg domestic LPG cylinder by ₹60 to ₹913 in Delhi, while the government continues to provide a ₹300 subsidy to Ujjwala beneficiaries.

Commercial LPG prices have surged even more sharply, with 19-kg cylinders rising ₹114.50 to ₹1,883, squeezing restaurants already grappling with supply curbs.

The government is also facing mounting fiscal pressure as it absorbs under-recoveries to keep prices from spiralling. LPG subsidy estimates for FY27 have crossed ₹11,000 crore, alongside a ₹17,500-crore support package for oil marketing companies.

Meanwhile, sourcing LPG from the US Gulf Coast due to the Hormuz disruption has significantly raised freight and insurance costs.