India Hormuz shutdown: LPG supply risk rises in 2026

Ceasefire collapse puts India back on alert

The collapse of the US-Iran ceasefire has pushed India back into energy-risk mode after Tehran shut the Strait of Hormuz, a key corridor for global oil and India’s gas imports. The strait is a critical route for hydrocarbons moving out of the Gulf, and the disruption is hitting shipping and procurement decisions across Asia. For India, the immediate concern is not only crude supply but also liquefied petroleum gas (LPG), which is heavily import-dependent. India has diversified crude suppliers over time, but the scale of disruption through Hormuz is still large enough to shake prices and logistics. The situation is unfolding as a supply chain shock rather than a single-day event, with restrictions beginning in early March. Market participants are watching both physical availability and price moves as the shutdown drags on.

Why the Strait of Hormuz matters to India’s import mix

Before restricted passage began in early March, about 45% of India’s crude oil imports, half of its LNG imports, and 90% of its LPG imports passed through the Strait of Hormuz. That makes the chokepoint especially important for cooking gas, even as crude sourcing has become more diversified. India’s energy security depends on imported oil, LNG, and LPG, and the Hormuz crisis directly threatens affordable access to these fuels. Analysts also note that a significant share of feedstock used for domestic consumption and refined exports comes either through Hormuz or from Russia. Any shortage from either of those sources increases pressure on refineries, distributors, and end-users. The closure also matters because rerouting around the disruption is not a simple swap for gas cargoes tied to Gulf loading points.

Crude prices jumped from $19 to above $114

Since Iran began restricting passage through the strait in early March, India’s crude basket surged from $19 to over $114 per barrel in April. The move highlights how quickly geopolitical risk at a maritime chokepoint can feed into import costs for the world’s third-largest oil importer. Higher crude prices tend to raise the cost of refined products and can strain government and corporate fuel budgets. The price rise also shapes refinery margins, inventory planning, and decisions on alternative grades and suppliers. While some of the crude disruption can potentially be cushioned by changing sourcing patterns, the price effect can still show up quickly across the economy.

LPG is the immediate pressure point

Multiple estimates in the reporting point to India importing roughly 60% to 67% of its cooking gas requirements, with about 90% of those LPG imports historically transiting the Strait of Hormuz. If the closure continues, experts expect household LPG prices to be among the first to face pressure. The scale of the LPG exposure is also visible in operational impacts, with reports of restaurants cutting menus, reducing hours, or shutting temporarily as LPG availability tightens. At the same time, the government has maintained that there is no shortage of LPG, saying supplies are being redirected to households as Gulf disruptions affect markets. With more than 300 million domestic LPG consumers and references to 330 million households in the reporting, distribution choices between commercial and household segments become politically and economically sensitive.

Supply shock indicators: inventories, Gulf production, import flows

The broader oil-market shock is showing up in several indicators cited across reports. India’s crude oil inventories are reported to have declined by around 15% amid the war and the indefinite closure of the strait. The near shutdown has also reduced Gulf oil production by 14.4 million barrels per day compared to pre-war levels, according to the report. On the import side, India’s crude oil imports slipped 23% so far this month compared with February, as inflows from the Gulf contracted sharply. Analysts tracking shipping say that if the trend persists and the strait stays shut, imports this month could drop about a fifth sequentially.

Angola emerges as a potential LPG and gas alternative

With supply chains under pressure, New Delhi is seeking alternative energy sources, including in Africa. Media reports say four major Indian state-run energy companies are in talks with Angola’s national oil company, Sonangol, to secure fresh supplies of cooking gas and natural gas. Angola is already a supplier of crude oil and LNG to India. If the talks succeed, it could become a source of LPG for India as well, potentially for the first time. The focus on Angola underlines a key constraint in the current crisis: for LPG and gas, diversifying away from Hormuz-linked flows is harder than simply switching crude suppliers.

What shipping data and Kpler analysts are indicating

Shipping data and analysts are giving a mixed picture on crude resilience versus LPG vulnerability. Nikhil Dubey, senior refining analyst at Kpler, said that if the disruption continues through March, total monthly volumes are projected at 115-125 million barrels, compared with a typical range of around 150 million barrels. Another Kpler analyst, Sumit Ritolia, said crude shortfalls from Hormuz disruption could be partially compensated by increased purchases of discounted Russian crude. Based on vessel tracking and market sources, Kpler expects incremental Russian crude imports in March could reach about 1.0 to 1.2 million barrels per day, potentially reducing the net shortfall to around 1.6 million barrels per day.

Why crude can be buffered but LPG remains hard to replace

The reporting highlights that refined product supply for domestic demand is seen as stable for now, with no current indications that India will struggle to meet internal consumption needs for major fuels like petrol and diesel, according to the cited analyst view. But LPG is described as the key variable to monitor in the coming weeks. India is said to consume about one million barrels per day of LPG but produce only 40% to 45% domestically, relying on imports for the rest, with 80% to 90% of those imports transiting Hormuz. Refineries can adjust operations to increase LPG output slightly, but even a 10% to 20% increase would still leave domestic supply well short of total demand, according to Ritolia. This is why the crisis concentrates quickly in cylinders and commercial users, even when crude flows can be partly rerouted.

Limited buffers: strategic reserves and short-term stock cover

India’s strategic petroleum reserves are described as covering only around eight to nine days of oil demand, with no comparable strategic reserves for natural gas. Another cited assessment says existing stocks could only sustain demand for two to three weeks if imports are disrupted. These figures help explain the government focus on conservation messaging and contingency sourcing. One report notes that the Prime Minister’s appeal for fuel conservation could be linked to the inventory drawdown. In a prolonged shutdown, the timeline for stress may differ by fuel, with LPG and gas likely to show strain earlier than petrol and diesel.

Key numbers at a glance

What it means for households, businesses, and investors

For households, the immediate risk is higher LPG prices and tighter cylinder availability if the shutdown persists, given how heavily imports depend on the Hormuz route. For small businesses, especially restaurants, the reports already describe operating disruptions linked to diminishing LPG availability. For investors, the story is split: crude sourcing can be adjusted to a degree through diversification and higher Russian inflows, but gas and LPG are less flexible in the short run. Import and inventory data will likely remain key signals, along with any confirmation of alternative LPG supply contracts.

Conclusion

India’s exposure to the Strait of Hormuz remains significant, particularly for LPG, even after years of crude diversification. With crude prices rising sharply, inventories reportedly down, and import volumes slipping, policymakers and state-run firms are moving on two tracks: securing alternative cargoes and managing near-term demand. The talks with Angola’s Sonangol underscore the urgency around cooking gas and natural gas. The next key checkpoints will be whether shipping through Hormuz resumes, whether alternative supply agreements materialise, and how quickly disrupted LPG flows can be replaced.