- India sharply diversified LPG sourcing amidst West Asia conflict.
- Global LPG prices surged; state retailers absorbed household costs.
- LPG consumption fell, highlighting India’s import dependency vulnerability.
New Delhi, Jun 20 (PTI): India sharply diversified its liquefied petroleum gas (LPG) sourcing during the West Asia conflict, increasing imports from the US, Iran and several other countries to reduce dependence on the Gulf region, while state-owned fuel retailers absorbed much of the surge in international prices to shield households.
Before the conflict, roughly 90 per cent of India’s LPG imports came from West Asian suppliers, leaving the country heavily exposed to regional disruptions. By April 2026, the United States accounted for nearly one-third of India’s LPG imports, up from just 8 per cent in February, according to a Crisil report.
The shift was aided by a 2.2 million tonne-per-year LPG supply agreement signed with the United States in late 2025, equivalent to about 10 per cent of India’s annual import requirement. Iran also re-entered India’s import basket, accounting for around 6 per cent of April imports, while supplies were sourced from countries like Argentina, Chile, France and the Netherlands.
The diversification helped maintain supplies during the conflict, but came at the cost of longer supply chains and higher freight expenses.
The disruption nevertheless weighed heavily on demand. LPG consumption fell to 2.47 million tonnes in April from 3.2 million tonnes in February as tighter availability and rising prices curbed usage.
After growing 6 per cent to a record 33.2 million tonnes in fiscal 2026, India’s LPG consumption declined 13 per cent year-on-year in both March and April, before falling 20 per cent in May.
Commercial and industrial users bore the brunt of the decline, with consumption dropping more sharply than household demand as market-linked customers responded quickly to higher prices and supply constraints.
Crisil said the conflict also triggered a sharp increase in global LPG prices. The Saudi Aramco Contract Price, the benchmark for Indian imports, rose 46 per cent between February and June as markets priced in supply risks and elevated freight costs.
However, the increase was only partially passed on to domestic consumers.
The price of a 14.2-kg household LPG cylinder in Delhi rose about 10 per cent between February and June, while the price of a 19-kg commercial cylinder surged more than 79 per cent.
The limited increase in household cooking gas prices led to a sharp rise in under-recoveries for oil marketing companies as procurement costs outpaced retail prices, it said, adding that the under-recoveries on domestic LPG cylinders in Delhi rose to Rs 651 per cylinder in May, while cumulative losses borne by fuel retailers during March-May were estimated at nearly Rs 22,000 crore.
The easing of tensions in West Asia and the potential reopening of key trade routes are expected to reduce immediate supply concerns and moderate global LPG prices.
However, the disruption exposed India’s continued dependence on imported LPG and the risks associated with concentrated sourcing.
While diversification and higher domestic production helped cushion the impact, the sector remains vulnerable to geopolitical disruptions, freight market volatility and swings in international energy prices, underscoring the importance of maintaining a broader import portfolio, the report added.
(Disclaimer: This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)
