New Delhi, June 20: Amid recent conflicts in West Asia, India has diversified its sources for liquefied petroleum gas (LPG) imports, reducing its reliance on the Gulf region. The country has increased purchases from the United States, Iran, and several other nations.
According to a report by Crisil, geopolitical tensions in West Asia have disrupted supply chains, prompting a significant shift in India’s LPG import structure. Traditionally, India has sourced nearly 90% of its LPG needs from West Asian countries. However, by April 2026, the U.S. emerged as a major supplier for India, accounting for approximately one-third of total imports, up from just 8% in February.
This transformation was made possible by a 2.2 million ton per year LPG supply agreement established between India and the U.S. at the end of 2025. This agreement fulfills about 10% of India’s annual LPG import requirements.
Iran has also rejoined India’s import sources, contributing around 6% to total imports in April. Additionally, India has sourced LPG from countries like Argentina, Chile, France, and the Netherlands.
While this strategy of diversifying import sources has helped maintain supply security during conflicts, it has also resulted in increased transportation costs due to longer distances.
Supply disruptions and rising prices have impacted domestic consumption. In February, India’s LPG consumption was 3.2 million tons, but it dropped to 2.47 million tons in April. High prices and supply challenges have affected demand.
In the fiscal year 2025-26, a record consumption of 33.2 million tons of LPG was reported, reflecting a 6% annual increase. However, demand has sharply declined in subsequent months.
In March and April, LPG demand fell by 13% year-on-year, with a further drop of 20% in May.
According to the report, commercial and industrial consumers were the most affected, facing market-based prices that immediately impacted their costs. In contrast, domestic consumer demand remained relatively stable, as retail prices for cooking gas saw only limited increases.
Crisil noted that the conflict has led to a sharp rise in global LPG prices. The Saudi Aramco contract price, considered a benchmark for Indian imports, surged by 46% from February to June due to supply disruption fears and increased freight costs.
Despite the significant rise in international prices, domestic LPG cylinder prices saw relatively modest increases. In Delhi, the price of a 14.2 kg domestic LPG cylinder rose by about 10% during this period, while the price of a 19 kg commercial cylinder increased by over 79%.
To keep domestic gas prices in check, oil marketing companies (OMCs) have experienced a substantial rise in under-recovery, as procurement costs have exceeded retail prices.
Crisil estimates that in May, the under-recovery for domestic LPG cylinders in Delhi reached ₹651 per cylinder. Between March and May, government oil companies incurred a total loss of approximately ₹22,000 crore.
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