India recorded a 17% year-on-year decline in LPG consumption between April and July 2026, totaling 8.8 million tonnes. This drop is primarily linked to severe supply chain disruptions originating from the Middle East. While import sources are shifting toward the United States to stabilize availability, the reliance on long-haul shipping introduces risks of higher freight costs and currency volatility for the energy sector.
India’s consumption of Liquefied Petroleum Gas (LPG) saw a significant decline of 17% year-on-year during the four-month period from April to July 2026. Official data indicates that total consumption dropped to 8.8 million tonnes, a shift largely driven by persistent supply chain bottlenecks in the Middle East.
The disruption is centered around the Strait of Hormuz, a critical maritime chokepoint for global energy trade. As tensions between the US and Iran have escalated, the flow of vessels through this region has been severely restricted, causing significant delays for shipments destined for India. Historically, India relied on Gulf nations for approximately 90% of its LPG imports, making the domestic supply chain highly sensitive to geopolitical instability in the region.
Strategic Pivot to US Sourcing
To counter the instability in traditional supply routes, India has aggressively diversified its energy sourcing. Between January and July 2026, the United States emerged as a major supplier, providing 3.6 million tonnes of LPG. While this diversification helps maintain domestic energy security, it presents new economic challenges. Imports from the US require longer shipping durations compared to Gulf routes, which translates into higher freight costs and increased exposure to currency exchange rate volatility. Investors in the energy and logistics sectors are closely tracking these input costs, as they can put pressure on profit margins across the supply chain.
Contrasting Fuel Trends
While LPG consumption struggled, India’s demand for transportation fuels remained resilient, highlighting a disconnect in the energy market. Petrol consumption rose by 6% to 15.2 million tonnes, and diesel demand increased by 4% to 33.7 million tonnes. This growth in mobility fuels suggests that the slowdown in LPG is primarily a supply-side constraint rather than a result of weak consumer demand.
Market Recovery and Future Risks
The domestic market showed early signs of stabilization in July 2026, with LPG consumption rising 7.5% month-on-month to 2.35 million tonnes. This recovery coincided with the government easing restrictions on commercial LPG sales, which had been implemented earlier in the year. Additionally, policy efforts to encourage the adoption of Piped Natural Gas (PNG) continue to influence traditional LPG usage patterns.
The primary monitorable for the coming quarters remains the stability of energy logistics. With India lacking the extensive strategic reserves for LPG that it maintains for crude oil, the domestic supply chain remains vulnerable to sudden shipping bottlenecks. Future shifts in energy costs, combined with the outcome of Middle Eastern geopolitical tensions, will be the key factors influencing both import viability and domestic energy inflation.