West Asia Conflict Plunges India's LPG Demand by 13%; Supply Disruptions Impact Households and Industry

West Asia Conflict Plunges India's LPG Demand by 13%; Supply Disruptions Impact Households and Industry​

India’s cooking gas LPG consumption faced a sharp 13 per cent slump in March. This significant decline is directly attributed to major supply disruptions resulting from the escalating West Asia conflict. The latest official data highlights severe availability constraints for both domestic household use and industrial consumption.

LPG consumption in March dipped to 2.379 million tonne, marking a substantial decrease compared to the 2.729 million tonne consumed in the same period last year.

Impact of Geopolitical Tensions on Energy Supplies​

The core challenge stems from India's reliance on imports, as the country sources approximately 60 per cent of its total LPG requirements. A large portion of this supply travels via the Strait of Hormuz, which was effectively compromised following strikes on Iran and Tehran's retaliatory actions.

With crucial supplies from Saudi Arabia and the United Arab Emirates disrupted, the central government implemented rationing measures. Authorities curtailed LPG supplies to commercial establishments, including hotels and various industries, aiming to prioritize and safeguard essential household cooking gas availability.

The operational data from the Oil Ministry's Petroleum Planning and Analysis Cell (PPAC) reveals a sharp sectoral breakdown. Sales to non-domestic users plummeted by almost 48 per cent, while bulk LPG sales registered a massive decrease of 75.5 per cent.

Government Intervention and Production Boost​

The sudden shortfall in availability led to a temporary divergence between actual consumption and government claims of normal supplies. To mitigate the crisis, the government swiftly directed refineries to reallocate feedstock. They prioritized shifting material from petrochemical production directly into boosting LPG output.

This proactive measure saw domestic LPG production rise to 1.4 million tonne in March, up from 1.1 million tonne recorded a year prior. Looking forward, the push successfully lifted domestic LPG production for the full 2025-26 fiscal year to 13.1 million tonne from an estimated 12.8 million tonne in the previous two financial years.

Resilience Shown in Petrol and Diesel Consumption​

Despite the major hiccup in the LPG sector, the broader energy market showed resilience in key fuel segments. Both petrol and diesel sales posted handsome increases in demand.

Petrol sales rose by 7.6 per cent, reaching 3.78 million tonne. Concurrently, diesel consumption saw an uptick of 8.1 per cent, hitting 8.727 million tonne.

For the full fiscal, ATF sales were up 2 per cent, totaling 9.161 million tonne. Meanwhile, petrol consumption posted a steady rise of 6.5 per cent, amounting to 42.586 million tonne.

Long-Term Trend Versus Short-Term Shocks​

Overall, the long-term trajectory of LPG consumption remains positive. Despite the exceptional nature of the March dip, overall LPG consumption for the full fiscal ended March 2026 was 6 per cent higher, reaching 33.212 million tonne.

Historically, LPG consumption has grown steadily in recent years. This growth is primarily fueled by dedicated government initiatives aiming to replace traditional, polluting fuels like firewood with cleaner energy alternatives.

While war-impacted fuels saw volatile trends, other industrial fuels faced mixed outcomes. Naphtha and fuel oil posted losses of 9.9 per cent and 1.4 per cent, respectively. However, bitumen used for road construction managed a 3 per cent rise in consumption, reaching 8.84 million tonne in 2025-26.

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