New Delhi: Prime Minister Narendra Modi Tuesday met External Affairs Minister S. Jaishankar and Petroleum Minister Hardeep Singh Puri to review India’s oil and gas situation as the Iran war entered the 11th day, causing massive disruptions in the global supply chain of energy commodities.
On Tuesday, the government set in motion a slew of measures to ensure that consumers do not face the brunt. This included invoking the Essential Commodities Act to regulate supply of natural gas amid concerns over potential shortages.
The notification outlines a priority framework for natural gas supply across sectors to ensure availability for critical uses during supply disruptions.
Under the order, the government has prioritised domestic households by ensuring 100 per cent supply, while directing oil marketing companies to ensure 80 per cent supply to tea industries, manufacturing units and other industries.
According to government sources, there is no shortage of gas and oil as of now, and invoking the Essential Commodities Act is a supply-management step aimed at keeping a check on hoarding and black marketing.
But reports of shortage of commercial LPG have poured in from states including Tamil Nadu and Karnataka.
On Monday, some restaurant and hotel associations raised concerns on social media about a lack of commercial LPG. In a letter, the Chennai Hotels Association wrote to the Prime Minister Narendra Modi seeking uninterrupted supply of commercial LPG. The letter stated that “commercial LPG has been temporarily suspended due to the shortage, for usage in restaurants and food industries.”
To address the grievances of hotel associations, the government has formed a three-member committee comprising executive directors of Indian Oil Corporation, Hindustan Petroleum Corporation Limited and Bharat Petroleum Corporation Limited to take corrective measures.
The sources quoted earlier also said domestic oil and gas companies have increased LPG production by about 10 per cent in the last few days to ensure smooth supply.
A source told ThePrint that the government is in talks with suppliers beyond the Middle East to procure oil and gas supplies. “We are sourcing 70 per cent of our crude oil supply from sources other than the Strait of Hormuz; it was only 55 per cent 10 days back,” the source said.
Currently, India has around 70 days of storage capacity for crude oil, according to sources at the ministry.
According to a Reuters story, Saudi Aramco CEO Amin Nasser warned of “catastrophic consequences” for the world’s oil markets if the war with Iran continued to disrupt shipping in the Strait of Hormuz.
The disruption has not only upended the shipping and insurance sectors but also promises to have drastic domino effects on aviation, agriculture, automotive and other industries, Aramco CEO Amin Nasser told reporters at a quarterly performance review meeting.
Analysts flag structural vulnerabilities
Energy analysts say India’s ability to offset import disruptions remains limited despite steps taken by the government.
“Domestic refineries can be pushed to maximise LPG yields, but refinery configurations and operational constraints mean production cannot be ramped up meaningfully to compensate for imports,” said Sumit Ritolia, lead analyst for oil markets at Kpler, a trade intelligence firm, to ThePrint. “At best, incremental output may cover only part of the LPG imported, not fully replace it.”
Ritolia added that India can draw upon its underground LPG storage cavern at Mangalore, which provides some short-term buffering capability. “However, given India’s structural dependence on Middle Eastern LPG and limited near-term supply elasticity, the overall LPG supply situation remains worrisome in a disruption scenario,” he said.
India consumes around 900–1,000 thousand barrels per day (kbd) of LPG, of which about 600 kbd is imported, according to Ritolia. Around 80–90 per cent of these imports come from the Middle East.
Umud Shokri, energy strategist and senior visiting fellow at George Mason University said India’s broader energy imports remain exposed to potential disruptions in the Strait of Hormuz, a key maritime chokepoint for global energy trade.
“India imports about 80–85 per cent of its LPG requirements, most of which are sourced from Gulf suppliers and transit through Hormuz, making the country highly exposed to supply interruptions,” Shokri told ThePrint.
He added that roughly 50–60 per cent of India’s LNG imports—primarily from Qatar—also pass through the route.
According to Shokri, if shipping through the strait is halted or severely restricted for an extended period, India could face supply constraints. “If disruptions last longer than 10 to 15 days, the country could start facing shortages, as India maintains limited strategic reserves for LPG and only modest LNG buffers,” he said.
Such disruptions could also push up domestic prices and trigger supply-side inflation in sectors heavily dependent on LPG and natural gas, analysts said.
Shokri noted that India currently maintains roughly 25 days of LPG stocks and about seven to eight weeks of crude oil reserves, which can help cushion short-term shocks.
“While the government’s current measures may help manage temporary disruptions, India’s heavy reliance on shipping routes passing through geopolitically sensitive chokepoints like the Strait of Hormuz highlights structural energy security vulnerabilities,” he said.
According to market analysts, India is increasingly looking to diversify its supply sources. If shipments through Hormuz remain constrained, Indian buyers may need to source replacement LPG cargoes from suppliers such as the US or West Africa, though these supplies involve longer voyages and higher freight costs.
(Edited by Viny Mishra)
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