India ramps up domestic LPG production as renewed US-Iran attacks spark fresh fears over Strait of Hormuz supplies

New Delhi: India is ramping up domestic cooking gas production to bridge the current supply gap and cushion against possible further import disruptions from renewed US-Iran attacks.

Local refiners aim to add about 4,000 metric tonnes per day of liquefied petroleum gas (LPG), or more than 10%, to the current output of 37,000-38,000 metric tonnes per day, according to people familiar with the matter. "For now, the stocks are comfortable.

Also read: Iran attacks 10 ships near Strait of Hormuz in response to US strikes, oil prices surge


We continue to receive supplies through the Strait of Hormuz, but this supply route is no more reliable," said a person privy to the refineries' production plans. "It can again be challenging if the transit through the strait is disrupted for a week." Current supplies through the Strait of Hormuz are a fraction of pre-war levels, when the route accounted for 90% of India's LPG imports.

The US and Iran have escalated attacks on each other's ships in recent days, dimming hopes of traffic returning to normal through the Strait of Hormuz, the critical waterway through which about a fifth of the world's crude oil and gas supplies transited before the war began on February 28. US President Donald Trump on Wednesday hinted at the possibility of oil prices staying high until the US mid-term elections in November.

Lower Domestic Consumption

India's LPG imports and consumption have significantly reduced since the start of the Iran war. LPG imports fell 25% year-on-year to 1.45 million tonnes in August, the highest monthly figure during this period, according to shipping data from Vortexa.

"Ample (global) LPG supply is not available," said Rohit Rathod, senior oil market analyst at Vortexa. "We are still about 0.6 million metric tonne below February 2026 levels and about 1.25 million metric tonnes down year-on-year in August when it comes to global seaborne LPG exports."

The import shortfall has largely been met by higher domestic production and lower consumption. Domestic LPG consumption was 17% lower year-on-year in August, with households, commercial users and industry all affected, according to the petroleum and natural gas ministry data. Bulk LPG consumption by industry has shrunk the most, plunging about 80% in July.

Also read: Shipping traffic via Strait of Hormuz stays below 10-day average, data shows

Some industry executives attribute part of the reduction to a shift to piped natural gas, diesel or wood pellets, while others point to informal supply curbs and demand destruction.

India had quickly ramped up domestic production to a peak of 54,000 tonnes per day in May from about 36,000 tonnes per day before the war by reducing input supplies to other product streams such as petrochemicals.

But after shortages of plastics and other materials started showing up, LPG production was reduced. Production fell 19% month-on-month to 1.2 million tonnes in July, the latest month for which data is available, after the US-Iran truce allowed cargoes to move more freely through the Strait of Hormuz. In June, the average production was about 50,000 tonnes per day.