India diversified its liquefied petroleum gas (LPG) imports during the recent West Asia conflict, increasing purchases from the United States, Iran, and other countries to reduce reliance on the Gulf region. The shift in LPG import profile was due to geopolitical tensions disrupting supplies from West Asia, which traditionally accounted for 90% of India’s LPG imports. By April 2026, the United States became a major supplier, contributing about one-third of India’s LPG imports compared to just 8% in February.
The diversification strategy was supported by a 2.2 million tonne per annum LPG supply agreement between India and the United States signed in late 2025. Iran also re-entered India’s import basket, making up nearly 6% of imports in April. Additionally, India sourced LPG cargoes from countries like Argentina, Chile, France, and the Netherlands. While this strategy ensured supply security during the conflict, it led to longer supply routes and increased transportation costs.
The disruptions in supply and higher prices affected domestic consumption, with India’s LPG consumption dropping to 2.47 million tonnes in April from 3.2 million tonnes in February. After a record consumption of 33.2 million tonnes in FY26, with a 6% annual growth, consumption sharply declined in the subsequent months. Commercial and industrial consumers were significantly impacted by market-linked pricing and rising costs, while household demand remained relatively stable due to limited retail cooking gas price increases.
The conflict caused a notable surge in global LPG prices, with the Saudi Aramco Contract Price, the benchmark for Indian imports, rising by 46% between February and June. Despite the international price hike, domestic household LPG prices saw only a modest increase. In Delhi, the price of a 14.2-kg domestic LPG cylinder rose around 10% during the period, while a 19-kg commercial cylinder price surged over 79%. This restrained increase in household LPG prices led to a significant rise in under-recoveries for oil marketing companies, with under-recoveries on domestic LPG cylinders in Delhi reaching Rs 651 per cylinder in May.
