India is facing an acute shortage of Liquefied Petroleum Gas and Liquefied Natural Gas triggered directly by the closure of the Strait of Hormuz, following the US-Israeli war on Iran that began on February 28, 2026, with the killing of Supreme Leader Ayatollah Ali Khamenei. Close to 90% of India’s LPG imports and 30% of its natural gas requirements are routed through the Strait of Hormuz, which connects the Persian Gulf with the Gulf of Oman. The disruption has caused a cascading domestic crisis: commercial cooking gas has been unavailable across the country, with the National Restaurant Association of India warning of catastrophic closures, around 20% of hotels and restaurants in Mumbai having shut down, and the Ministry of Petroleum and Natural Gas invoking the Essential Commodities Act, 1955, to prioritise domestic LPG supply.
Government officials have confirmed that while gas from Norway and the United States has become economically viable at prices above $10 per MMBtu (compared to Qatar’s pre-crisis price of $6-8 per MMBtu), the shipping distance of approximately two months means there will be a significant interim shortage before relief arrives. The Petroleum Ministry had already directed all oil refining companies to maximise LPG output by prioritising propane and butane for cooking fuel over industrial use, resulting in a 10% increase in domestic LPG output.
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For UPSC and SSC aspirants, this crisis is analytically significant at multiple levels: it illuminates India’s structural energy import dependence, the geopolitical geography of energy transit routes, the governance mechanisms for energy security, and the foreign policy implications of West Asian conflicts for Indian interests.
Table of Contents
Background and Context
Five Important Key Points
- India imports approximately 90% of its LPG and 30% of its natural gas requirements through the Strait of Hormuz, making it one of the most geopolitically exposed countries to disruptions in West Asian energy transit infrastructure.
- Iran’s Security Council Secretary Ali Larijani warned that the Strait of Hormuz could become a “Strait of defeat” for the US, and approximately 20-21 million barrels of oil move through it daily, along with 20% of global LNG trade.
- The Ministry of Petroleum and Natural Gas invoked the Essential Commodities Act, 1955 in a gazette notification dated March 9, 2026, introducing tiered priority allocation for domestic piped natural gas, CNG, LPG, and fertilizer manufacturing, with domestic priority sectors guaranteed 100% supply and fertilizer plants guaranteed 70%.
- India has simultaneously despatched 5,000 tonnes of diesel from the Numaligarh refinery to Bangladesh using the Indo-Bangladesh friendship pipeline operationalised in 2023, demonstrating continued regional energy diplomacy even amid domestic scarcity.
- The government constituted a committee of three executive directors of oil marketing companies to review representations for LPG supply to commercial entities, while simultaneously exploring imports from Norway and the United States as diversification strategies.
India’s Energy Import Dependence: The Structural Vulnerability
India’s energy import bill is among the largest components of its current account deficit. The country imports over 85% of its crude oil requirements and is the world’s third-largest oil importer. The LPG dependence is particularly acute because it directly affects household energy security for hundreds of millions of families — the Pradhan Mantri Ujjwala Yojana has extended LPG coverage to over 10 crore households in the bottom of the income pyramid, making any disruption in supply a matter of immediate welfare impact.
The geographical concentration of India’s import sources exacerbates this vulnerability. Qatar has historically been the dominant LNG supplier, and the Persian Gulf region collectively accounts for the overwhelming majority of India’s hydrocarbon imports. The Strait of Hormuz is therefore not merely a geopolitical chokepoint in an abstract strategic sense — it is the artery through which India’s cooking energy flows.
The Geopolitics of the US-Iran War and India’s Position
The war that began on February 28, 2026, with US-Israeli strikes killing Ayatollah Ali Khamenei, represents the most significant escalation of West Asian tensions in decades. Iran’s response has been multi-directional: attacking US bases and energy infrastructure in the Persian Gulf, targeting Gulf states including Bahrain, Saudi Arabia, Kuwait, and the UAE, and closing the Strait of Hormuz to oil and gas traffic. Iran’s new Supreme Leader, Ayatollah Mojtaba Khamenei, has signalled continuity and defiance, with Foreign Minister Abbas Araghchi ruling out negotiations with Washington.
India’s position in this conflict is one of studied strategic ambiguity. As a major energy importer dependent on Persian Gulf supplies, India has a direct interest in the earliest possible restoration of Strait of Hormuz transit. As a country that has historically maintained functional relationships with both Iran and the United States, and which is a member of the Shanghai Cooperation Organisation, India faces competing diplomatic pulls. India’s recent fuel supply to Bangladesh through the friendship pipeline — even amid domestic scarcity — signals that New Delhi is working to maintain its strategic standing in South Asia without openly choosing sides in the West Asian conflict.
Essential Commodities Act and Energy Governance
The invocation of the Essential Commodities Act, 1955 — a law originally designed for food and agricultural commodity shortages — for natural gas allocation reflects both the severity of the crisis and the adequacy of India’s statutory framework for energy emergencies. The Act empowers the Central Government to control production, supply, distribution, and pricing of essential commodities. The March 9 gazette notification established a tiered priority structure: domestic PNG, CNG for transport, and LPG production at 100%; fertilizer plants at 70%; tea, manufacturing, and other industrial consumers at lower priority levels.
This tiered structure is analytically important because it reveals the hierarchy of India’s energy priorities: household welfare and food security (LPG) above industrial production, agriculture (fertilizers) above manufacturing. It also reveals a governance gap — India lacks a dedicated statutory framework for energy supply emergencies of the kind that the current war has created, relying instead on a colonial-era commodity control law.
Diversification Strategy: Norway, the United States, and the Lead Time Problem
India’s short-term response to the crisis has been to explore LNG imports from Norway and the United States, where prices above $10 per MMBtu make long-distance shipping economically viable. However, the approximately two-month sailing time from these origins creates an unavoidable interim shortage. This lead time problem is structural: India’s LNG import infrastructure, including regasification terminals, is configured primarily for Gulf supplies, and the logistics of redirecting cargo from trans-Atlantic sources cannot be instantaneously managed.
In the medium term, the crisis has accelerated conversations about import diversification — specifically the exploration of Brunei crude and gas from East Asia as an alternative source. This reflects a broader realisation that India’s energy security strategy has been overly concentrated on the Gulf and requires genuine geographic diversification across all hydrocarbon categories.
Way Forward
India’s response to this crisis must have both immediate and structural dimensions. In the immediate term, strategic petroleum reserves must be activated more rapidly, and the government should negotiate emergency supply arrangements with Gulf states not directly involved in the conflict. In the medium term, India must accelerate domestic natural gas production under the HELP (Hydrocarbon Exploration and Licensing Policy) framework, expand LNG import terminal capacity at East Coast ports to reduce logistical dependence on the Western seaboard, and negotiate long-term supply agreements with multiple diverse sources. In the long term, India’s energy security requires a dedicated Energy Security Act that establishes a statutory framework for supply emergencies with tiered response protocols, mandatory stockholding norms for LPG and LNG, and a Strategic Gas Reserve analogous to the Strategic Petroleum Reserve.
Relevance for UPSC and SSC Examinations
UPSC: GS Paper II — India’s Foreign Policy, India and West Asia, India-US Relations, Energy Diplomacy. GS Paper III — Indian Economy (Energy Security, Infrastructure), Essential Commodities Act, Hydrocarbon Policy. Essay Paper — Energy security as the foundation of national security.
SSC: General Awareness — Indian Economy, Energy Policy, Important Geographical Locations (Strait of Hormuz).
Key Terms: Strait of Hormuz, Essential Commodities Act 1955, Pradhan Mantri Ujjwala Yojana, HELP Policy, LNG (Liquefied Natural Gas), LPG (Liquefied Petroleum Gas), MMBtu, Indo-Bangladesh Friendship Pipeline, Numaligarh Refinery, Strategic Petroleum Reserve, Oil Marketing Companies (OMCs).