India diversified its liquefied petroleum gas (LPG) imports during the recent West Asia conflict, significantly increasing purchases from the United States, Iran and several other countries to reduce its dependence on the Gulf region.
According to a report by Crisil, India’s LPG import profile underwent a notable shift as geopolitical tensions disrupted supplies from West Asia, which traditionally accounts for nearly 90 per cent of the country’s LPG imports. By April 2026, the United States emerged as a major supplier, contributing nearly one-third of India’s LPG imports, compared with just 8 per cent in February.
The change was supported by a 2.2 million tonne per annum LPG supply agreement signed between India and the United States in late 2025. The agreement covers around 10 per cent of India’s annual LPG import requirements. Iran also returned to India’s import basket, accounting for nearly 6 per cent of imports in April. In addition, India sourced LPG cargoes from countries including Argentina, Chile, France and the Netherlands.
While the diversification strategy helped maintain supply security during the conflict, it also resulted in longer supply routes and higher transportation costs.
The supply disruptions and elevated prices, however, impacted domestic consumption. India’s LPG consumption fell to 2.47 million tonnes in April from 3.2 million tonnes in February as higher prices and supply constraints affected demand.
After reaching a record 33.2 million tonnes in FY26, marking an annual growth of 6 per cent, LPG consumption declined sharply in the subsequent months. Demand fell 13 per cent year-on-year in both March and April, followed by a steeper 20 per cent decline in May.
Commercial and industrial consumers were the worst affected as they faced market-linked pricing and responded more quickly to rising costs. Household demand remained relatively resilient, supported by limited increases in retail cooking gas prices.
Crisil noted that the conflict led to a sharp increase in global LPG prices, with the Saudi Aramco Contract Price, the benchmark used for Indian imports, rising 46 per cent between February and June amid concerns over supply disruptions and higher freight costs.
Despite the surge in international prices, domestic household LPG prices saw only a modest increase. The price of a 14.2-kg domestic LPG cylinder in Delhi rose around 10 per cent during the period, while the price of a 19-kg commercial cylinder jumped more than 79 per cent.
The restrained increase in household LPG prices led to a sharp rise in under-recoveries for oil marketing companies as procurement costs significantly exceeded retail prices. Crisil estimated that under-recoveries on domestic LPG cylinders in Delhi reached Rs 651 per cylinder in May, while cumulative losses borne by state-owned fuel retailers during March-May stood at nearly Rs 22,000 crore.
