India’s LPG Consumption Drops 12.8% in March as West Asia Turmoil Disrupts Supply

Why It Matters

The sharp consumption fall highlights India’s vulnerability to geopolitical supply shocks and underscores the need for greater domestic LPG capacity and diversified import routes.

Key Takeaways

• LPG consumption fell 12.8% YoY in March to 2.38 Mt.
• Household LPG sales dropped 8.1%, while bulk demand plunged 75.5%.
• Domestic LPG production rose 27% to 1.4 Mt via refinery diversion.
• FY 2025‑26 LPG use grew 6% despite March slump.
• Over 90% of India's LPG imports transit the Strait of Hormuz.

Pulse Analysis

The West Asia conflict has once again exposed the fragility of global energy logistics, especially for commodities that rely on narrow maritime chokepoints. India imports roughly 60% of its LPG, with more than nine‑tenths of that volume moving through the Strait of Hormuz. When the strait was closed amid escalating tensions involving the United States, Israel and Iran, shipments from Saudi Arabia and the UAE were curtailed, creating an immediate shortfall that rippled through both residential and commercial markets.

In response, Indian authorities leveraged refinery flexibility, diverting feedstock from petrochemical streams to boost LPG output. Production climbed to 1.4 million tonnes in March—a 27% year‑on‑year increase—and the full fiscal year saw output rise to 13.1 million tonnes. While household consumption fell 8.1%, the broader fiscal‑year trend remained positive, with a 6% rise in total LPG use driven by continued government incentives to replace polluting fuels. The sharp contraction in bulk and non‑domestic demand, however, signals that commercial users are highly sensitive to supply uncertainty, prompting many to curtail operations or seek alternative energy sources.

Looking ahead, the episode reinforces the strategic imperative for India to diversify its LPG import corridors and expand domestic refining capacity. Investments in pipeline infrastructure, floating storage units, and alternative sourcing from regions like Africa or the Americas could mitigate future disruptions. Moreover, the episode may accelerate policy discussions around energy security, encouraging a shift toward renewable cooking solutions and greater stockpiling to buffer against geopolitical volatility.