India’s liquefied petroleum gas (LPG) imports are the worst hit due to closure of the Strait of Hormuz and uncertainty surrounding the resumption of vessel traffic, which can only be partially substituted by cargoes from the US.
However, this will come with a higher time and logistic costs, which will hit harder as the Indian rupee is currently trading at its weakest against the US dollar.
West Asia accounts for 85-90 per cent of India’s LPG imports with most cargoes transiting the 34 km-long world’s most critical energy chokepoint. The scenario is also adding to higher LPG prices, which can further weaken profitability of oil marketing companies (OMCs) due to higher under-recoveries.
Analysts and officials said that Washington can step in to provide replacement cargoes, but only partially.
Anna Zhminko, Vortexa’s Associate Market Analyst, in a March 3 commentary said that the Middle East Gulf (MEG), excluding Iran, is India’s largest supplier of LPG, covering 92 per cent (around 720,000 barrels per day) of the country’s imports as of 2025.
On March 2, maritime consultancy Drewry said that it expects that in the near term (1 week) there will be no loadings in the Middle East with vessels turning away from the Strait. In the short term (1 month), it anticipates that exports from the US to Asia will increase, which will partially substitute for losses from the Middle East.
It also expects a spike in global LPG prices. Nearly 40 per cent of global LPG supply passes through the 34 km narrow passage annually, directly impacting importers such as India and China, which depend heavily on Middle East LPG supplies.
“We envisage very large gas carriers (VLGCs) near the Strait (at the moment) to be idled or moved to safe positions. Sustained blockade of the passage will prompt vessels to reposition to the US, where new terminal capacity and robust natural gas liquids (NGL) production can support higher exports,” it added.
The ballasting of vessels will create a short-term squeeze in vessel availability, triggering volatility in rates. However, Drewry expects vessel availability to rise in the US Gulf, which, along with the sustained Hormuz blockade, would limit cargo availability and weaken rates.
Regular supplies of LPG are important for India as the country does not have strategic reserves for the key cooking fuel. Around 90 per cent of LPG is consumed in households for cooking. India has around 33.08 crore active domestic consumers, which includes around 10.51 crore beneficiaries under the PM Ujjwala Yojna (PMUY).
“Should MEG supply disruptions materialise on a more significant scale, India would likely be the first destination seeking prompt replacement barrels. Such replacement could likely come from the US, particularly US Gulf Coast (USGC), where LPG exports reached a dataset high this January at 2.34 million barrels (mb),” Zhminko added.
PADD 3 propane stocks also continue to sustain seasonal highs this year, tracing around 20 million barrels above last year’s levels as of late February (EIA), she noted.
A senior government official said that even Washington does not want high energy prices with US midterm elections taking place this year. President Donald Trump is highly motivated to keep a lid on domestic gasoline prices.
Published on March 5, 2026