India LPG Crisis: Government Redirects Supply to Households, Seeks Imports From Australia and Norway

The Union Petroleum Ministry has directed state-owned oil marketing companies (OMCs) to prioritise the supply of domestic LPG cylinders to household consumers over commercial users amid fears of shortages triggered by supply disruptions in West Asia due to the ongoing Iran-Israel conflict. The ministry also extended the waiting period for LPG refills from 21 days to 25 days to curb hoarding and black marketing, while instructing all Indian oil refineries and petrochemical complexes to divert propane and butane streams exclusively toward LPG production rather than other petrochemical uses.

India relies on imports for more than 50% of its LPG requirements, with approximately 80% sourced from Gulf countries, including Saudi Arabia, Qatar, and the United Arab Emirates. Disruptions in these supplies have prompted the government to ramp up domestic production last week and accelerate efforts to diversify import sources. Officials confirmed ongoing talks with Australia, Norway, and Algeria for additional volumes. Additionally, new contracts signed recently with the United States will deliver around 2.2 million tonnes per annum of LPG—equivalent to nearly 10% of India's total annual imports—with shipments commencing in January 2026.

Several states, including Bihar, Maharashtra, and Punjab, have reported shortages of LPG cylinders, leading to concerns among households and businesses. The government has clarified that petrol pumps and fuel stations are operating normally with no broader fuel shortage in the country. However, the prioritisation of domestic consumers has raised alarms in the commercial sector. The National Restaurant Association of India warned that continued restrictions on commercial LPG could force widespread restaurant closures, while the Bengaluru Hotels Association indicated that many establishments in the city might halt operations from Wednesday onwards due to cylinder unavailability.

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In response to industry representations, the petroleum ministry assured that imported LPG earmarked for non-domestic use would continue to supply essential sectors such as hospitals and educational institutions. For restaurants, hotels, and other commercial users facing acute shortages, a panel comprising directors from the three major OMCs—Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation—will review and process requests for cylinders on a case-by-case basis.

The LPG supply crunch coincides with a sharp surge in global crude oil prices, which crossed the $100 per barrel mark for the first time in four years on March 9, 2026. Brent crude reached an intraday high of $119 before settling around $102.10, while West Texas Intermediate touched $119.48 before retreating closer to $100. The escalation has been attributed to heightened geopolitical risks in the Middle East, further complicating India's energy import dynamics.

The government's measures aim to safeguard household cooking gas availability during the festive and summer season peak demand periods while mitigating the immediate impact of regional supply constraints. As diversification efforts and domestic production adjustments take effect, authorities continue to monitor the situation closely to prevent prolonged disruptions for both residential and essential commercial users.

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