Whalesbook
Supply Chain Disruptions Hit LPG Demand
India's energy sector saw a significant hit in April, with liquefied petroleum gas (LPG) consumption falling 16.16% year-on-year. Data from the Petroleum Planning and Analysis Cell (PPAC) shows consumption at 2.2 million tonnes. This is down from 2.62 million tonnes in April 2025 and also lower than the 2.379 million tonnes used in March 2026. The drop reflects the direct impact of ongoing geopolitical tensions in West Asia, which have severely limited the availability of essential energy imports.
West Asia Conflict Impacts Shipping
The main reason for this drop is the ongoing conflict in West Asia, which has severely impacted shipping through the Strait of Hormuz, a vital shipping corridor for global energy shipments. About 90% of India's LPG imports use this path. With key suppliers like Saudi Arabia and the UAE facing disruptions, the Indian government took steps to protect domestic supply. Commercial use by hotels and industries was reduced, and household refill frequencies were extended to save supplies. This careful management highlights how vulnerable an energy system is when around 60% of LPG needs come from imports.
Energy Demand Slows Across Sectors
Other energy uses in April also showed a slowdown. Aviation Turbine Fuel (ATF) dropped 1.37% year-on-year. Diesel sales grew only 0.25%, a sharp drop from the previous month's 8.1% growth. Petrol sales rose 6.36% year-on-year, but this was slower than March's 7.6% increase. These numbers suggest that geopolitical instability and higher prices are dampening energy demand across several sectors. Global crude oil prices have jumped, with Brent crude nearing $105 per barrel in late April 2026 due to supply fears.
Import Reliance Tests Energy Security
India's energy security is challenged by its heavy reliance on imports. By 2030, imports are expected to make up over 53% of total fossil fuel use. For LPG, essential for India's clean cooking goals, imports cover about 60%. This dependence on foreign supplies, especially through routes like the Strait of Hormuz, leaves India facing price swings and supply worries. Past events, like the 1973 oil crisis, show how severe economic effects, including high inflation and growing trade deficits, can result from such shocks. Although India has made good progress in renewable energy, reaching 20.2% of electricity generation in FY25, this crisis shows the shift away from fossil fuels is still vulnerable to global events. Higher global LPG prices have already pushed domestic prices up for commercial users, with a 19-kg cylinder now costing a record Rs 3,071.50 in Delhi.
Systemic Risks in Energy Imports
The current situation clearly shows the hidden risks in India's reliance on energy imports. Even with varied sourcing, including from the United States, trade funneled through key shipping points creates an ongoing risk. Oil marketing companies (OMCs) face growing financial strain from losses when global prices rise, which could require government bailouts and affect public finances. This crisis challenges fuel affordability and risks hindering the clean energy transition. If supply disruptions and price hikes continue, they could reduce people's spending power, force households back to using biomass, and damage the nation's energy security. While India's GDP now grows faster than oil use due to a shift to services and better efficiency, high demand means energy shocks are still a major economic worry.
Outlook: Navigating Energy Volatility
Energy markets are expected to remain volatile, with ongoing geopolitical tensions threatening supply chains and prices. India's government aims to balance increasing domestic coal production with rapid renewable energy development. However, recent disruptions show the immediate difficulties in managing import dependence. The shocks from fossil fuel prices are speeding up demand for clean energy technologies like renewables and EVs, possibly giving them a long-term boost. Moving forward, India needs to strengthen its own capacity and cut imports to become more resilient against outside shocks, securing its energy supply and clean energy goals.