India Regulates Natural Gas Supply as Middle East Conflict Disrupts Energy Routes

India has introduced emergency measures to control the distribution of natural gas and liquefied petroleum gas (LPG) after escalating conflict in West Asia disrupted key energy supply routes vital to the country’s imports.

The Union government announced on 9 March that it had invoked the Essential Commodities Act, 1955 to regulate the production, allocation and distribution of natural gas, including liquefied natural gas (LNG) and re-gasified LNG. Officials say the move is designed to ensure adequate supplies for essential sectors as global shipments face disruption.

The Ministry of Petroleum and Natural Gas said the decision followed an assessment that the ongoing conflict involving the United States, Israel and Iran had affected energy shipments passing through the Strait of Hormuz, one of the world’s most important maritime energy routes.

Government officials stated that several suppliers had declared “force majeure”, a contractual provision used when extraordinary circumstances prevent fulfilment of agreements. As a result, shipments of LNG have reportedly been diverted or delayed.

The ministry said regulating the supply chain was necessary “to ensure equitable distribution and continued availability of natural gas for priority sectors”.

Priority allocation system introduced

Under the emergency order, the government has divided gas consumption into four priority categories in order to maintain essential services.

The highest priority category covers household energy and transport-related supply. This includes piped natural gas delivered to homes, compressed natural gas used in vehicles, production of liquefied petroleum gas, and fuel required to operate pipeline infrastructure. These sectors are expected to continue receiving gas at levels equivalent to their average consumption over the previous six months, subject to operational availability.

Fertiliser production has been placed in the second priority category. According to the order, gas supply to fertiliser plants will be maintained at about 70% of their average consumption during the previous six months, depending on available supply. Fertiliser manufacturing relies heavily on natural gas as a feedstock for producing ammonia and urea, both essential for agricultural production.

Industrial sectors supplied through the national gas grid, including tea processing units and manufacturing facilities, form the third priority group. These consumers are expected to receive about 80% of their previous six-month average gas consumption.

The fourth priority group covers industrial and commercial customers supplied through city gas distribution networks. These users will also receive around 80% of their previous average consumption if supplies remain available.

Officials say the measures are intended to prevent severe shortages in sectors that support households, transportation and food production.

High-level meeting on LPG shortages

The government’s intervention comes as India faces a growing shortage of LPG, widely used for cooking in homes across the country.

Indian Prime Minister Narendra Modi held a high-level meeting with Petroleum and Natural Gas Minister Hardeep Singh Puri and External Affairs Minister Subrahmanyam Jaishankar to review the situation and consider options for securing additional supplies.

According to officials, the crisis is linked to the closure of the Strait of Hormuz following military developments involving the United States, Israel and Iran. The strait connects the Persian Gulf to international shipping routes and is a critical corridor for global oil and gas exports.

India relies heavily on imports for its LPG needs. Government data indicates that about 62% of the country’s LPG supply is imported, with between 85% and 90% of these imports passing through the Strait of Hormuz. The disruption has therefore created immediate challenges for domestic supply.

India consumes approximately 31.3 million tonnes of LPG each year. Around 87% of this demand comes from household consumers, while the remaining 13% is used by commercial sectors such as restaurants, hotels and certain industries.

To protect domestic consumers, the government has prioritised LPG deliveries to households. Commercial users, who typically rely on market-priced cylinders rather than subsidised domestic supplies, are facing tighter availability.

Industry groups representing restaurants and hospitality businesses have warned that shortages are already affecting operations in major cities including Mumbai and Bengaluru.

Emergency measures to stabilise supply

Authorities say several short-term measures have been introduced to manage the situation.

Oil refineries have been instructed to increase LPG output wherever possible by adjusting processing streams normally used for petrochemical production.

The government has also extended the refill booking interval for domestic LPG cylinders to 25 days, compared with the previous cycle of 21 days. Officials say the measure is intended to discourage stockpiling and prevent black-market trading.

Imported LPG supplies are being redirected to critical non-domestic users such as hospitals and educational institutions, where energy shortages could disrupt essential services.

In addition, the Ministry of Petroleum and Natural Gas has formed a review committee composed of senior executives from state-run oil marketing companies. This body will examine requests from commercial users such as hotels and restaurants and allocate limited supplies based on operational necessity.

Hindustan Petroleum Corporation Limited said in a statement that despite significant geopolitical disruptions, steps were being taken to boost domestic production and manage available inventories.

Broader energy security concerns

The situation highlights India’s vulnerability to disruptions in global energy supply chains. As one of the world’s largest energy importers, the country depends heavily on oil and gas shipments from the Middle East.

The Strait of Hormuz alone handles a substantial share of global petroleum and LNG exports. Any disruption to traffic through the narrow waterway can quickly affect international markets and the supply security of importing countries.

Analysts say India may increasingly seek alternative suppliers and shipping routes if the crisis continues. However, shifting supply chains can take time and may involve higher transportation costs.

For now, officials say the immediate priority is maintaining stable supplies for households, agriculture and essential services while the geopolitical situation in West Asia remains uncertain.