Government asks oil companies to build 30-day LPG reserves amid Hormuz supply risks

Speaking to reporters, Sharma said that the proposal is still at an early stage and declined to comment on a timeline for these reserves to be created. Whether this additional storage will be in underground caverns—as in the case of strategic crude oil reserves—or in overground tankage will also be worked out by the OMCs depending on the cost considerations and feasibility.

The move to expand storage capacity for LPG, which is used as a cooking fuel by over 33 crore Indian households, comes as LPG has been the most impacted energy segment due to the West Asia war and the consequent closure of the Strait of Hormuz. While India has strategic petroleum reserves for crude oil, it has none for LPG and liquefied natural gas (LNG). A bulk of the available stocks for crude oil also are commercial stocks with refiners.

India depends on imports to meet about 60% of its LPG consumption, and a whopping 90% of those imports came via the Strait of Hormuz. This means that the Strait of Hormuz effectively saw the movement of around 54% of India’s LPG consumption. In the case of LNG imports, on which India depends to meet half of its natural gas requirement, the Strait accounted for 55-60% of the supplies. As for crude oil, about 40% came through the shipping corridor.

The disruption has forced India to ration LPG supplies to industrial and commercial consumers in a bid to prioritise crores of households that depend on the fuel to run their kitchens. As a demand management tool, the minimum gap between LPG refill bookings by households has also been increased.

India’s LPG consumption stood at about 90,000 tonnes a day before the war. But with the disruption in flows through the Strait of Hormuz and seasonal dip in demand, LPG consumption has declined to about 72,000 tonnes a day, according to Petroleum Ministry estimates.

Moreover, domestic refineries have been maximising domestic LPG production to partly offset the loss in imports, and refiners are scrambling for LPG cargoes from alternative geographies like the US, Australia, and Russia, among others. Through diplomatic efforts, India has also managed to get a number of its LPG tankers stuck in the Persian Gulf. Domestic LPG production currently stands at about 50,000-52,000 tonnes a day, which is meeting 70% of the domestic demand, up from 40% before the war.

India’s LPG imports dropped sharply in March and April amid the crisis, halving from the average import volumes for most of the financial year 2025-26, ship tracking data shows. In the first 11 months of 2025-26—April-February—India’s LPG imports averaged at about 2 million tonnes a month, according to vessel tracking data from commodity market analytics firm Kpler. In March, LPG imports crashed to 1.1 million tonnes, and dropped further to 0.95 million tonnes in April.

With the West Asia war exposing the risks of having thin emergency energy buffers, the government and industry stakeholders are now looking at creating additional storage for LPG and LNG, and expanding the capacity of the crude oil stockpiles that can be used during extended energy supply disruptions.

Early May, Petronet LNG CEO AK Singh had said that plans were being worked out to build additional storage tanks for LNG in order to have a robust buffer to shield the country from future disruptions.

With the persistent uncertainty and lack of clarity on when vessel movements through the Strait of Hormuz would return to the pre-war normal, India’s LPG supply challenge is far from over with supply tightness likely to continue for the foreseeable future.

The Strait of Hormuz—the narrow waterway between Iran and Oman—is the key maritime chokepoint through which a sizable chunk of global petroleum flows usually pass. The war in West Asia began with the US-Israeli strikes on Iran on February 28. Vessel movements through the Strait have crashed and reduced to a trickle since then—to fewer than 10 a day from 130-140 before the war erupted.