India has lifted restrictions on commercial liquefied petroleum gas (LPG) supplies that were imposed at the onset of the recent Middle East conflict, following improvements in the energy situation. The measures, introduced after the closure of the Strait of Hormuz in late February amid the US-Iran war, had affected non-domestic LPG distribution, with priority given to household consumption.
The Strait of Hormuz, a critical maritime passage through which about 20 percent of global oil and gas shipments normally transit, was closed temporarily, disrupting supplies to India, the world’s most populous country and the second-largest importer of LPG. Much of India’s LPG imports—approximately 90 percent prior to the conflict—come from Middle Eastern producers. The disruption prompted India to diversify its sources, increasing imports from the United States, which are expected to reach a record high of over 1 million metric tons in June.
In a statement released by the petroleum ministry late Thursday, the government announced the restoration of non-domestic packed LPG supplies to levels comparable to those before the West Asia crisis. Bulk LPG supply, initially suspended at the crisis’s start, has been partially reinstated to 50 percent of pre-crisis consumption levels. The government also plans to boost supplies of propane, butane, and other petrochemical feedstocks to support industrial production.
During the crisis, India implemented supply restrictions on commercial and industrial consumers, prioritizing domestic household needs. LPG, a mix of propane and butane, serves as a primary cooking fuel for millions of Indian households. The government also increased prices for LPG amid the supply challenges and directed petrochemical producers to divert feedstock to refiners in order to maximize local LPG output.
The easing of restrictions coincides with renewed energy flows through the Strait of Hormuz, following a recent agreement between Iran and the United States that included reopening the strategic waterway. This development has alleviated some pressure on India’s energy imports, which had been complicated by geopolitical tensions.
To further mitigate supply vulnerabilities, India approved a nearly $4 billion plan last month to expand coal gasification, a cleaner process for converting coal into energy. This initiative aims to reduce dependence on imported fuels and ease energy supply pressures exacerbated by the conflict in the Gulf region. The disruptions in energy supply had also weighed on India’s economic outlook, contributing to cautious growth forecasts.
The government has stated its intent to produce at least 40,000 metric tons of LPG daily domestically to meet demand. Overall, the removal of supply restrictions marks a significant step towards normalizing energy distribution as geopolitical tensions in West Asia show signs of easing.