India diversified its liquefied petroleum gas (LPG) imports during the West Asia conflict, reducing dependence on Gulf suppliers and increasing sourcing from the United States, Iran, and other countries.
Before the conflict, nearly 90% of India’s LPG imports came from West Asia. By April 2026, the US accounted for almost one-third of imports, up from 8% in February, aided by a supply agreement signed in late 2025. Iran re-entered India’s import basket with 6% of April supplies, while shipments also came from Argentina, Chile, France, and the Netherlands.
The diversification ensured supply continuity but raised freight costs and extended supply chains. Consumption fell sharply, dropping to 2.47 million tonnes in April from 3.2 million tonnes in February. After hitting a record 33.2 million tonnes in fiscal 2026, LPG demand declined 13% year-on-year in March and April, and 20% in May.
Commercial and industrial users faced the steepest decline as higher prices and tighter availability hit market-linked customers. Household demand remained relatively stable due to limited price hikes.
Global LPG prices surged, with the Saudi Aramco Contract Price rising 46% between February and June. Domestic consumers saw only partial increases. The price of a 14.2-kg household cylinder in Delhi rose 10%, while a 19-kg commercial cylinder jumped 79%.
Oil marketing companies absorbed the gap, leading to under-recoveries of Rs 651 per household cylinder in May. Cumulative losses between March and May were estimated at Rs 22,000 crore.
Analysts said easing tensions in West Asia may reduce supply concerns, but the disruption highlighted India’s vulnerability to geopolitical risks. Diversification and domestic production cushioned the impact, yet dependence on imports remains a challenge.
