As power supply disruptions became widespread during the Middle East crisis, India has diversified its LPG imports by tapping suppliers across the globe.As uncertainty gripped global energy markets after late February, the country has significantly diversified its LPG sources, increasing imports from the United States, Iran and several other countries to reduce its dependence on the Gulf region.
Meanwhile, state-run fuel retailers absorbed much of the rise in global prices, cushioning the impact on domestic consumers.Before the conflict, about 90% of India’s LPG imports came from the Middle East, making the country highly vulnerable to unrest in the region. According to the Crisil report, the share of LPG imports from the US rose sharply to nearly a third of total imports by April 2026, compared to just 8% in February.
This change was supported by the 2.2 million tons per annum LPG supply agreement signed with the US in late 2025. The deal is equivalent to about 10% of India’s annual LPG import requirement. Iran also returned to India’s import basket, contributing about 6% of its imports in April. Additional supplies were obtained from Argentina, Chile, France and the Netherlands.While diversification helped ensure continuity of supplies during conflict, it also led to longer supply routes and increased shipping costs.
The disruption had a noticeable impact on demand. LPG consumption fell to 2.47 million tons in April from 3.2 million tons in February, as supply shortages and higher prices affected usage.India’s LPG consumption grew by 6% to reach a record 33.2 million tonnes in FY26. However, demand fell by 13% year-on-year in both March and April before falling by 20% in May.The sharpest decline was among commercial and industrial consumers, whose consumption declined more than household demand, as market-bound users reacted quickly to rising prices and supply constraints.
LPG prices are jumping
According to Crisil, the conflict also led to a sharp rise in global LPG prices. Saudi Aramco contract prices, which serve as the benchmark for Indian LPG imports, rose 46% between February and June amid concerns about supply risks and rising freight charges.Although global prices rose, only part of the increase went to domestic consumers. The price of a 14.2 kg domestic LPG cylinder in Delhi rose by about 10% between February and June, while the price of a 19 kg commercial cylinder rose by more than 79%.The relatively modest increase in domestic cooking gas prices led to high instances of under-recovery for oil marketing companies as procurement costs rose faster than retail prices. The shortfall recovery on domestic LPG cylinders in Delhi reached Rs 651 per cylinder in May, while the cumulative losses borne by fuel retailers between March and May were estimated at Rs 22,000 crore, the report said.As tensions in the region ease and major trade routes potentially reopen, immediate concerns about LPG supplies are expected to ease and global prices may decline.However, the report noted that the disruption highlighted India’s continued dependence on imported LPG and the risks associated with concentrated sourcing.He added that although diversification and increased domestic production have helped limit the impact of conflict, the sector remains vulnerable to geopolitical risks, shipping market fluctuations and fluctuations in international energy prices, which reinforces the need for a broader import portfolio.