India’s LPG Supply Disrupted as Middle East Conflict Escalates
New Delhi – India is facing a tightening supply of Liquefied Petroleum Gas (LPG) as escalating conflict in the Middle East disrupts key shipping routes, impacting both commercial and household consumers. The crisis is prompting concerns about potential shortages and price increases, leading the government to take measures to monitor supplies and quell speculation.
Strait of Hormuz Disruption
The primary cause of the LPG supply disruption is the heightened tensions in the Gulf region, particularly around the Strait of Hormuz. This critical sea route, through which 85-90% of India’s LPG imports pass, has seen increased security risks due to the ongoing conflict involving Iran [1]. Shipping companies are facing increased caution, higher insurance costs, and the potential for attacks, slowing down tanker movements and disrupting deliveries [1].
Impact on Commercial Users
The initial impact of the supply squeeze has been most acutely felt by commercial users, including restaurants, hotels, and catering businesses. Delayed cylinder deliveries are forcing establishments to reduce menus, adjust operations, or temporarily close kitchens [1]. Some restaurants are already simplifying meals to conserve fuel, and others are temporarily suspending hot food service [2]. In New Delhi, one eatery posted a notice stating they were only serving rice and lentils, while the Delhi High Court canteen stopped serving meals altogether, offering only sandwiches [2].
Household Concerns and Government Response
While household supplies haven’t been critically impacted yet, concerns are growing among consumers. Restrictions on LPG cylinder distribution to commercial establishments have sparked worries that household consumers might be next [3]. Induction cooktops have quickly sold out on online platforms as people anticipate potential shortages [3].
The central government has advised states and Union territories to monitor LPG supplies daily, take strict action against those exploiting the situation, quell rumors, and maintain law and order [3]. A 24×7 control room has been established with nodal officers from the Ministries of Home Affairs, Information and Broadcasting, and Petroleum and Natural Gas [3].
India’s LPG Consumption and Import Dependence
India consumes approximately 31.3 million tonnes of LPG annually, with 87% of this demand coming from the domestic sector [3]. Still, the country relies heavily on imports to meet its LPG needs, with approximately 62% of total consumption sourced from overseas [1]. Domestic production only covers 40-45% of the total demand, making the nation vulnerable to disruptions in global supply chains [1].
Price Increases
The conflict has already led to price increases for LPG cylinders. The price of domestic LPG cylinders has risen by Rs60 (approximately $0.65), while commercial cylinders have increased by Rs115 (approximately $1.25) [4].
Industry Response
The National Restaurant Association of India (NRAI) has appealed to the Petroleum and Natural Gas Minister, Hardeep Singh Puri, to ensure supplies to the restaurant industry, emphasizing that food services are essential [4]. Some businesses, like the California Burrito chain, are conserving gas and installing induction stoves to mitigate the impact [2]. The Delhi district government has implemented a mandatory 25-day gap between LPG bookings to manage demand [2].