A man pushes a trishaw loaded with cooking gas cylinders in the western Indian city of Ahmedabad
The government invoked the Essential Commodities Act and Petroleum Products (Maintenance of Production, Storage and Supply) Order stating that LPG — a mixture of propane and butane — is an essential domestic fuel used by households for cooking across India and its uninterrupted supply is necessary in public interest.
The Thursday order directs all refiners to maximise propane and butane streams to produce LPG and make it available to Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation.
“We are in a comfortable position on LPG. However, the government is already scouting for supplies from wherever possible, including the US, Canada and Africa. Today’s order is also a step in the direction of maintaining adequate supplies of LPG,” said top sources.
India consumed more than 33 million tonnes of LPG in FY25, of which over half was imported. Of this, 85-90 per cent of imports came from West Asia, with most cargo transiting the Strait of Hormuz.
Middle East Gulf (MEG), excluding Iran, is India’s largest supplier of LPG, covering 92 per cent (around 720,000 barrels per day) imports as of 2025, as per Vortexa. Maritime consultancy Drewry pegs that nearly 40 per cent of the global LPG supply passes through the 34 km narrow passage annually.
Sources said India is already buying 2.2 million tonnes (mt), or 10 per cent of its LPG imports, from the US. The cargoes have already started from January 2026. Besides, Canada is another source for LPG, besides Africa. The government is exploiting all possible sources to get fresh supplies, some of which are expected by March-end.
India invoking emergency powers to boost LPG production comes as the Finance Ministry’s Monthly Economic Review warned that “some sectors dependent on LNG and crude, like fertilisers and petrochemicals, could be affected if the crisis is prolonged”.
“Crude oil may be one obvious stress marker, but the supplies of natural gas and cooking gas also matter. The safety of sea lanes matters for overall exports and capital flows,” it added.
Pamela Munger, Vortexa’s Head of Market Analysis EMEA, said: “LPG markets have reacted sharply with India being the most exposed to sustained MEG disruption as 80-90 per cent of India’s LPG imports originate from the Middle East Gulf.”
LPG shortages could appear quickly in countries such as India and Indonesia as LPG is used as a primary residential fuel and short shipping routes from the Gulf leave these markets particularly exposed, she added.
Top sources said that India’s position is “very comfortable” on crude oil and LNG at present.
Sourcing LPG
Sumit Ritolia, Kpler’s Lead Research Analyst for Refining & Modelling, recently told businessline that If shipments through Hormuz remain constrained, Indian buyers may need to source replacement LPG cargoes from alternative suppliers such as the US or West Africa, though these supplies involve longer voyages and higher freight costs.
Washington’s propane exports to India stood at around 15,109 thousand barrels in 2025 — the highest on record. This is after India pledged to buy more energy products from the US to manage bilateral trade.
“Domestic refineries can be pushed to maximise LPG yields, but refinery configurations and operational constraints mean production cannot be ramped up meaningfully to compensate import; at best, incremental output may cover only one to two additional VLGC cargoes per month,” he added.
India can also draw upon its underground LPG storage cavern at Mangalore, which provides some short-term buffering capability. However, given India’s structural dependence on West Asian LPG and limited near-term supply elasticity, the overall LPG supply situation remains worrisome in a disruption scenario, said Ritolia.
A senior government official said that besides the US Gulf Coast (USGC), Canada is also a source for LPG.
The recent Canada-India Ministerial Energy Dialogue pushes for deepening bilateral energy trade, including supply of Canadian LNG and LPG. Canada has current and emerging LNG projects. It is also advancing LPG exports to Asia via the West Coast.
Published on March 6, 2026