FACTBOX: India seeks alternative LPG supplies as Strait of Hormuz risks persist

India is seeking to diversify its LPG imports, prioritizing LPG production at refineries and intensifying diplomatic efforts, while New Delhi steps up efforts to ensure the flow of cooking fuel to millions of households, as well as priority sectors, such as hospitals and educational institutions, in the wake of the war in the Middle East.

The country relies on the Gulf region for about 60% of its LPG consumption, prompting urgent government intervention to secure alternative supplies and encourage the use of kerosene and coal in restaurants and other lower-priority sectors to ease pressure on availability.

Analysts said India may need to rely more significantly on long-haul spot cargoes if the war persists, potentially increasing freight costs and impacting domestic prices.

"The silver lining is the ongoing diplomatic dialogue between Iran and India. This engagement helped enable Indian-flagged LPG carriers to transit the region, setting a positive precedent," said Charles Kim, associate director for LPG at S&P Global Commodities at Sea. "Continued cooperation could support the passage of additional Indian-linked ships, keeping vital supply routes workable for India and offering some relief to the broader market."

India has confirmed the safe passage of two state-owned LPG carriers through the Strait of Hormuz, which accounts for about 90% of its LPG imports from the Middle East.

Anmol Bhushan, associate director for LPG at S&P Global Energy CERA, said, "India is increasingly turning to the US for LPG as geopolitical tensions reshape global trade flows. If the Middle Eastern conflict continues for a long period, there is a chance for North American LPG to gain a stronger foothold in the Indian import mix. Recent trade patterns show rising US volumes moving into India."

The global LPG market is facing cargo scarcity, as disruptions in the Middle East have temporarily sidelined a region that represents roughly 30% of worldwide LPG availability -- squeezing the spot cargo pool and tightening overall supplies, S&P Global Energy analysts said.

Trade flows

• Two state-owned LPG carriers -- VLGCs Shivalik and Nanda Devi -- crossed the Strait of Hormuz and reached India earlier in the week started March 16. Each carrier was transporting about 46,000 mt of LPG, totaling over 92,000 mt of cooking gas supplies for the domestic market.
• US LPG loadings destined for India are increasing, with volumes now surpassing those from traditional Gulf suppliers, according to CAS data.
• India's weekly LPG imports fell to 265,000 mt in the week to March 19, from 322,000 mt on March 5, according to CAS. Middle East inflows to India declined to just 89,000 mt in the week to March 19, representing only 34% of total imports, the lowest share since January. Alternative regional supplies increased to 176,000 mt in the week to March 19, up from zero the previous week when the Middle East accounted for 100% of imports, CAS data showed.
• Indian oil marketing companies secured a term tender for 2.2 million mt of US-origin LPG for 2026, equivalent to about four VLGCs per month. India imported nearly 480,000 mt of US-origin LPG in the first two months of 2026, corresponding to around 11 VLGCs.
• According to the shipping ministry on March 18, 22 Indian-flagged vessels, including LPG carriers, remained in the western Persian Gulf region, and the Directorate General of Shipping was closely monitoring developments in coordination with ship owners, agencies and Indian missions.

Prices

• Middle East propane and butane cargoes gained at the March 18 Asian close, despite a $10.64/mt decline in front-month Brent crude futures, due to supply concerns amid the war in the Middle East.
• Platts, part of S&P Global Energy, assessed FOB AG propane and butane cargoes $9/mt higher day over day at $648/mt and $642/mt, respectively, on March 18, following deals concluded on the Intercontinental Exchange during the end-of-day trading window.
• Middle East propane swaps on an FOB Saudi Arabia basis were mixed, with front-month April assessed $1/mt higher at $588/mt, while second-month May was assessed $1/mt lower at $592/mt, according to Platts.
• CFR North Asia propane and butane cargoes hit four-year highs at the March 18 Asian close on supply concerns after the US's Targa declared force majeure on LPG shipments from its Galena Park terminal.
• Platts assessed CFR North Asia propane and butane cargoes $22/mt, or more than 2.4%, higher day over day at $908/mt and $934/mt, respectively, on March 18. The last time both these assessments were higher was on March 31, 2022, when CFR North Asia propane stood at $928.50/mt and CFR North Asia butane at $948.50/mt, Platts data showed.
• In March, commercial LPG prices in Delhi rose to Rupees 1,883/cylinder ($20.20/cylinder), from Rupees 1,740.5/cylinder in February, according to a price notification from Indian Oil Corp. Domestic non-subsidized LPG prices in Delhi were Rupees 913/cylinder in March, the notification showed. The last revision in the non-subsidized segment occurred on April 8, 2025, when prices increased to Rupees 853/cylinder from Rupees 803/cylinder; the latter price had remained unchanged since August 2024.

Infrastructure

• India has implemented emergency supply measures and increased domestic production to mitigate the impact of potential LPG shortages on households and businesses, while also accelerating the transition to piped natural gas.
• Reliance Industries is maximizing LPG production at its Jamnagar refining and petrochemical complex to ensure ample domestic market supplies.
• India's domestic production supplies about 41% of the country's LPG demand, while the remaining volumes are imported, according to officials from the petroleum ministry.
• The oil ministry has introduced revised booking intervals of 25 days in urban areas and up to 45 days in rural areas to ensure equitable distribution, according to the government.
• State governments are undertaking enforcement measures to prevent hoarding and black marketing of petrol, diesel and LPG.

• India consumed 31.3 million mt of LPG in the fiscal year 2024-25 (April-March), up 5.5% from FY 2023-24, according to oil ministry data.