US-Iran war impact: Emergency powers invoked, India asks refiners to step up LPG output to avoid cooking gas shortage - report

Middle East crisis impact: The government has activated emergency provisions to ensure there is no shortage of liquefied petroleum gas (LPG) in wake of the ongoing US-Israel-Iran war that has hit India’s imports of the energy source. India, which was the world’s second-largest LPG importer last year, consumed 33.15 million metric tonnes of the fuel. LPG is a blend primarily composed of propane and butane.

Around two-thirds of India’s LPG demand is met through imports, with the Middle East accounting for roughly 85 to 90 per cent of those supplies. According to a Reuters report, emergency powers have been invoked and domestic refiners have been instructed to increase the production of LPG in order to avert a potential shortage.

India Moves To Step Up LPG Output

Under the directive issued late on Thursday, all oil refiners have been told to maximise LPG output by ensuring that the propane and butane available with them are fully utilised for cooking gas production, the report said.

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The government has also directed producers to supply LPG, propane and butane to state-run refiners Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp so that these companies can maintain uninterrupted distribution to households.

Government data shows that India currently has around 332 million active LPG consumers.

The compulsory diversion of propane and butane toward LPG production is expected to reduce the output of alkylates, a component used in blending gasoline, particularly affecting production by Reliance Industries Ltd, the Reuters report said.

According to data from LSEG, Reliance exported roughly four alkylate cargoes every month last year.

The government has also instructed refiners not to use propane and butane for petrochemical manufacturing.

A trade source was quoted as saying that redirecting propane and butane for LPG production would squeeze margins for petrochemical companies that produce items such as polypropylene and alkylates, as these products typically command higher prices than LPG.

According to Global Trade Research Initiative, India imported $13.9bn worth of LPG from West Asia in 2025, which is 46.9 per cent of its LPG imports. LPG remains the primary cooking fuel for millions of households.

India Eyes Alternative LPG & LNG Sources

According to a PTI report, India has approached the United States to arrange maritime insurance protection for vessels transporting oil from the Middle East, as the country seeks to maintain stable energy supplies beyond its existing reserves.

The official said the ministry is currently holding discussions with leading producers and trading firms to secure supplies of crude oil, LPG and liquefied natural gas (LNG).

"We are in touch with US authorities for getting a cover from the International Development Finance Corporation for vessels to transit the Strait of Hormuz," he said.

US President Donald Trump has directed the multilateral financial institution to extend political risk insurance and financial guarantees to support maritime trade in the region.

However, the official noted that before the IDFC can offer such coverage, a fund worth several hundred million dollars must first be created to support the insurance mechanism. He added that the insurance premium would be borne by the parties involved in the cargo contracts.

The government is also negotiating with suppliers such as Sonatrach and Abu Dhabi National Oil Company, along with global trading houses including TotalEnergies, Vitol and Trafigura, to secure additional oil and gas shipments.

In addition, the official said India has increased its imports of crude oil and LPG from the United States.