India's Broader Strategy to Strengthen LPG Security

 India is stepping up to increase its domestic liquefied petroleum gas (LPG) production in response to renewed US Iran conflict.

The conflict raises fresh concern over the movement of cooking gas through the Strait of Hormuz.

The production push is aimed at bridging the domestic supply gap and providing a buffer against further disruption in imports.

The move is part of the nation’s broader plan to strengthen domestic LPG supply resilience at a time when the country remains heavily dependent on overseas supplies.

In August, government set a maximum daily domestic production target of 68,810 tonnes for public and private sector refineries and upstream companies.

Indian Oil Corporation (IOC) has also increased LPG production by nearly 30 percent, while maintaining high refinery utilization despite frequent disruption to maritime energy trade.

Hormuz Remains the Critical Vulnerability

Strait of Hormuz remains central to India’s maritime energy security, particularly for LPG, with a substantial share of the nation’s import being sourced and procured through the strategic waterway.

Any further disruption could consequently affect the entire supply chain, constraining freight availability, delaying cargo schedules and putting pressure on domestic inventories.

India has responded by urging refiners and oil companies to focus not only on boosting domestic LPG production capabilities, but also strengthening storage capacity and transportation infrastructure to safeguard the supply chain against future disruption.

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Import Diversification Gains Momentum

India is also focusing on diversifying its import basket, with the United States emerging as a major supplier, accounting for more that 50 percent of India’s LPG import over the course of six months following the West Asia conflict.

IOC has also finalized arrangements with Algeria’s Sonatrach for 2027, involving a monthly supply of about 45,000-55,000 tonnes of LPG.  Indian state owned oil companies are also expected to jointly tender for additional US LPG supplies, as the country aims to source up to 25 percent of its LPG imports from the US in 2027. The shift underscores India’s strategy of combining higher domestic production along with greater geographical diversification of imports.

Notably, India’s effort to diversify LPG supplies has not diminished the Gulf’s importance, with the region continuing to contribute a substantial share of the country’s import. August data showed a 44.2 percent month-on-month rise in LPG shipment from the Gulf suppliers to 448,990 tonnes, while the US shipment stood at 719,300 tonnes.

From Production Push to Supply-Security Strategy

The latest developments highlight an important distinction: Increase in domestic LPG production is about reducing vulnerability, not achieving complete energy independence.

The renewed risks surrounding the Strait of Hormuz have accelerated a structural shift in India’s LPG market. While boosting domestic production remains at the center of the government’s response, the larger objective is to build a resilient supply chain that can withstand any future disruptions without triggering prolonged domestic shortage.

India’s is therefore shaping its policy around-higher refinery output, diversified imports, larger storage buffers and stronger transportation infrastructure. From a broader perspective, India’s push to increase domestic LPG production could evolve beyond a temporary crisis measure, laying the foundation for a more resilient and strategically diversified energy supply system.