Strait of Hormuz Crisis: India’s LPG Imports & Energy Security

Subject: GS 3: Economy

Context: Recently, the Strait of Hormuz crisis has sharply disrupted India’s LPG supplies, pushing the US share in India’s LPG imports to 53% during March–August 2026, compared with 7.9% in the preceding six months.

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Why is the Strait of Hormuz Important?

• Location: Narrow waterway connecting the Persian Gulf with the Gulf of Oman and Arabian Sea.
• Global Significance: Carries around one-fifth of global oil and LNG flows.
• India’s Dependence: Around 90% of India’s LPG imports, 40% of crude oil imports and 60% of LNG imports traditionally move through the region.
• Strategic Vulnerability: Disruption can directly affect energy availability, prices and household welfare.

Why Did US LPG Imports Surge?

• Supply Disruption: Conflict in West Asia constrained traditional Gulf supplies.
• Alternative Sourcing: The US emerged as a readily available alternative supplier.
• Global Position: US is among the world’s largest LPG exporters.
• Price Competitiveness: US propane was already relatively competitive compared with Asian supplies.
• Strategic Diversification: India is increasingly seeking to diversify import sources to reduce geopolitical supply risks.

Impact on India

• Household Security: LPG availability became a priority for millions of households.
• Rationing: LPG supplies to industrial and commercial consumers were temporarily restricted to prioritise households.
• Demand Management: Minimum interval between household refill bookings was increased.
• Domestic Production: Indian refineries maximised domestic LPG production to partly offset import disruptions.
• Import Diversification: Refiners sourced cargoes from alternative geographies, particularly the US.
• Consumption Adjustment: LPG consumption fell from around 90,000 tonnes/day to 80,000 tonnes/day during the disruption.

Energy Security Lessons

• Diversification: Reduce excessive dependence on a single geographical region or chokepoint.
• Strategic Reserves: Strengthen storage and emergency stockpiles for critical fuels.
• Domestic Capacity: Expand domestic LPG production and refining capacity.
• Long-term Contracts: Secure diversified supply agreements across multiple regions.
• Alternative Fuels: Promote electric cooking, biogas and other cleaner alternatives where feasible.
• Maritime Security: Protect critical sea lanes and energy supply chains through international cooperation.

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Conclusion

The shift towards US LPG demonstrates India’s ability to adapt supply chains during geopolitical disruptions, but sustained energy security requires diversified suppliers, resilient infrastructure, adequate reserves and greater domestic capacity.

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